Chinese buyers reappeared in the physical market this week but stopped short of striking any deals, while Thai raw sugar premiums slipped as crushing picked up in Thailand, dealers said on Wednesday. More than 900,000 tonnes of cane have been crushed in Thailand, the world's largest exporter after Brazil, since the season started in mid-November, with around 43,000 tonnes of raw sugar produced so far.
Thai high polarisation, or hipol, raw sugar for January-March delivery was offered at premiums of 100 points to New York's March contract, down from 135 points last week. There were no bids as consumers waited for better offers. "China is sniffing around but their target price is very low. Maybe they will buy sugar at below 22 cents, or maybe when it hits 20 cents, then they will start buying," said a dealer in Singapore.
"Nothing is done yet. I think they are waiting." China is expected to produce 12 million tonnes of sugar in the year that began in October, up 15 percent from a year earlier, but consumption is forecast at 14 million tonnes, leaving a shortfall of 2 million tonnes.
ICE March raw sugar futures added 0.37 cent to settle at 23.49 cents a lb on Tuesday, but the contract was still within sight of a 5-month low hit last week on worries that a souring economic outlook could hit demand. Thai raw sugar from the new crop was offered at premiums of between 70 and 80 points to New York's March contract for March-May delivery. Last week, raws for March-May cargo were offered at 85 point premiums, with bids at 75 points.
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. Thai J-spec, or raw sugar favoured by Japanese consumers, was offered at 70 points to New York futures and bid at 60 points. Philippine raws stood at 130 point premiums but there were no reports of deals.
While Thai raw premiums softened, Thai white sugar was mostly steady at $65 to $75 premiums to London's March contract for prompt delivery, with dealers noting buying interest from Malaysia. White sugar for March-May delivery was much cheaper and stood at premiums of $30 to $40 a tonne. London's March white sugar futures on Liffe added $3.10 to close at $604.20 a tonne on Tuesday. "Physical buying is still going on, basically for December shipment arriving before the middle of January. There are spot businesses that we've done," said another dealer in Singapore. "Malaysia is in the market for white sugar."
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