Thai sugar premiums for nearby shipments were stuck in a range on soaring futures and competition from the Philippines, while steady sales of next year's crop suggested that Thailand has plenty of sweetener to offer, dealers said on Thursday.
The state-run Thai Cane and Sugar Corp (TCSC) will open a tender to sell 30,000 tonnes of raw sugar from the 2011/12 crop next week - its sixth tender so far this year. Crushing starts in November and lasts through April. The widely traded high polarisation, or hipol Thai raw sugar, was offered at 180 to 220 points above New York's October contract, barely changed from last week, but the value could fall if futures market keeps rising.
"This Philippines lowpol sugar makes life a little complicated. Not too many refiners could handle it except some Japanese refiners," said a dealer in Singapore. "So if there is more of it, and potentially for the October futures expiry, it could drag the Thai premiums down versus July-September contracts and may be also later in the year."
Premiums for J-spec, or low polarisation raw sugar favoured by Japanese consumers, tumbled to 80 points from last week's 150 points for prompt shipment. J-spec for March to May 2012 shipment was offered at 50 points, while hipol was valued at 60 points premiums, with no buyers.
Thailand is the world's second-largest sugar exporter after Brazil. Philippine sugar producers can export as much as 200,000 tonnes raw sugar to the world market this year on top of its US quota commitments, with local output of the sweetener expected to hit a three-year high. "I haven't heard of any demand from destinations recently.
Thai premium is under pressure from offers from the Philippines," said a dealer in Bangkok. "Hipol is offered at 180 to 200 points, but I don't see buyers," he added. High futures prices also turned off demand, said dealers, while talks that China was buying sugar from Vietnam and other origins to cover a supply gap and cool domestic prices had died down.
New York's October raw sugar futures on ICE inched up 0.19 cent to end at 31.13 cents per lb on Wednesday, not far from a 5-month high at 31.68 cents hit on Monday. London's October white sugar on Liffe closed down $1.90 at $803.50 a tonne, after touching a contract high of $821.00 on Monday. "There are rumours that over the past two months or so that some have been importing sugar into Vietnam and then re-exporting out to China," said another dealer in Singapore. "Thai white sugar is offered at $90 above the October contract but there are no buyers."
WEEKAHEAD Dealers awaited TCSC's tender on August 4, when the raw sugar was expected to be traded at premiums to New York sugar futures. The TCSC will offer only J-spec raw sugar, a low-quality type sold mostly to Japan. Thailand has produced record sugar in the current 2010/11 crop of 9 million tonnes. Traders and industry officials expect Thailand to produce at least 6.5-7.0 million tonnes from the 2011/12 crop but no official forecast has been made yet.
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