Raw sugar premiums slip;
rising supply weighs
Thai raw sugar premiums for prompt delivery ticked lower on
Tuesday and are likely to fall further next week as supplies
rise, not only in Asia but
elsewhere in the world, dealers said on Tuesday.
Crushing in Thailand will pick up later this month while
Thai white sugar premiums could also fall because of fierce
competition from top consumer India, which aims to
sell more sweetener to get rid of excess stocks.
Thai raw sugar for January-March delivery was offered at
premiums of 95 points to New York’s March contract, down
from 110 points last week. Crushing in Thailand, the
world’s largest exporter after Brazil, will last through
“I believe that premiums will be trending lower since Thai
crushing will accelerate and sugar output will outpace last
year’s production,” said a dealer in Bangkok.
“Moreover, India will export more 150 Icumsa sugar which
will in theory put pressure on Thai premiums for 45 Icumsa,”
said the dealer, referring to different types of
white sugar produced by the two countries.
The lower the ICUMSA level, the higher the degree of
THAI WHITE SUGAR PREMIUMS OF $40 TO $50
Thai white sugar for January-March delivery was quoted at
premiums of $40 to $50 a tonne to London’s March contract.
There were no quotations last week as dealers
waited for more offers from crushers.
Crushing in Thailand normally starts in late October or
early November, but it was slightly delayed this year
because of severe flooding, which had little impact on
the crop. Thailand is forecast to churn out a record 9.9
million tonnes of sugar this year.
India, which has issued a formal order for exports of 1
million tonnes of sugar, will produce 25 million tonnes in
the crop year starting in October, 2011, higher than
annual demand of about 22 million.
Prices of Indian white sugar dropped to $610 from as high as
$635 last week.
Global sugar prices have been under pressure from a
crippling debt crisis in Europe, excess supply in India,
rising output in Thailand, and expectations of a bumper
crop in the northern hemisphere from producers such as
Russia, France and Ukraine.
“People are somewhat bearish on the market, given that
supply is now becoming quite surplus to requirements.
There’s a lot being offered around,” said a dealer in
“In the next month or so, there should be a lot of supply
offered between Thailand, the Philippines, India and Europe.
Brazilian and Guatemalan sugar are also coming
Thai high polarisation, or hipol raw sugar, for March-May
shipment, was offered at premiums of 70 points to New York’s
March contract, unchanged from last week, with
no reports of activity.
The low-quality Thai raws favoured by Japanese buyers, or
J-spec, was offered at premiums of 40 to 45 points to New
York’s March contract, up from 20 points last week,
as sellers jacked up the value to make up for declines in
Brazilian raws for January to March shipment were offered at
premiums of 60 points, with bids at 20 points. March-May
sugar was offered at 65 points, but bids only
emerged at 45 points.
March raw sugar futures on ICE shed 0.11 cent to end at
23.29 cents a lb on Monday, off a 30-year peak around 36
cents in February. London’s March white sugar contract
rose $1.10 to close at $606.30 a tonne in a technical
Thai sugar premiums could slip next week because of ample
supply, and there was even talk that Pakistan, another main
producer, had begun offering sweetener.
Pakistan is expecting a bumper crop of up to 4.5 million
tonnes from the 2011/12 crop, despite losses caused bby
floods in the country’s south. The country’s annual
consumption is about 4.2 million tonnes.
“There are some offers, or people asking around whether you
want to buy Pakistan sugar. There are no details yet and
some say prices will be at ‘market level’,
although I don’t know what that really means,” said another
dealer in Singapore.
Courtesy: The DAWN