Sugar prices in the domestic and international market are increasing day by day amid reports of low output in the coming season. It is being traded at $420-$430/tonne and expected to witness further increase in the next month's contracts. Sugar future increases slightly on the on the National Commodity and Derivatives Exchange on Thursday due to increase in demand by bulk consumers.

The prices of sugar for contracts in March gained 0.44 per cent at Rs 2,070 per quintal while contracts for April gained Rs 7, or 0.30 per cent at Rs 2,119 per quintal. Similarly, contracts for May gained 0.32 per cent, to Rs 2,193 per quintal due to heavy demand by local and foreign buyers.

Experts believe that demand may further rise as cold beverages and ice ream makers can influence future trading in the coming summers. Meanwhile, sugar output in India may decline to 16 million tonnes this season as compared to earlier estimates of about 18 million tonnes. Government may also keep the option of sugar import open to check the rise in prices in the domestic market.