SINGAPORE: Malaysia was seen buying raw sugar to replenish stocks, but details were sketchy, while sellers pushed up premiums for Thai sugar to offset recent declines in New York futures, dealers said on Wednesday.
Malaysia wants to buy 3 million tonnes of raws over a three-year period, with deals believed to have taken place late last week. But a lack of reaction from sugar futures suggested the market was desperate for details.
"I am hearing they did half of the quantity needed. That should set them up quite nicely. It is interesting that if that is the case, then the market reaction is quite poor," said a dealer in Singapore.
"However, it might depend on how much of the original sale had been hedged. There could have been more than the total quantity hedged, and therefore the market might actually fall on completion."
At least four other dealers in Singapore and Bangkok said they also heard about Malaysia's purchases.
"We know a fair bit of the detail but not all, so I'd rather not comment at this stage," said a dealer at an international trading house in Singapore.
ICE March raw sugar futures rose 0.06 cent to end at 24.81 cents a lb on Tuesday, but the contract had earlier dropped to 24.50 cents, its weakest since early October, as worries about the debt crisis in Europe weighed on soft commodities.
Thai high polarisation, or hipol, raw sugar for January-March delivery was offered at 135 to 140 points premiums to New York's March contract, up from 125 to 130 points last week. Bids only emerged at 90 and 100 points.
Consumers were likely to wait for premiums to slip on the prospect of good harvests in Thailand, while Asian buyers such as Vietnam, South Korea and Indonesia were on the sidelines because of ample supply.
Crushing was at its tail end in Indonesia, which is Southeast Asia's largest consumer, with domestic white sugar output in 2011 estimated at 2.3 million tonnes, only modestly up from last year's 2.2 million tonnes.
"Local refineries have plenty of stocks now, and they are struggling to find warehouses," said a dealer in Jakarta. "As of Nov. 10, output reached 2.047 million tonnes, and only four refiners are still crushing cane."
To cover supply shortages, Indonesia imports sugar from Thailand, where Thai raw sugar for March-May delivery was bid at 75 points over New York's March contract, with no offers.
Thai white sugar for prompt delivery was offered at as high as $35 premiums to London March contract, higher than last week's $20 to $25 premiums.
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