Thai raw sugar premiums held steady this week, shored up by Asian buyers despite rising supply, and Indian prices were also unchanged ahead of speculation that the government will soon decide to allow more exports, dealers said on Wednesday. A few cargoes of Thai J-spec sugar, or low-quality raw sugar favoured by Japanese consumers, changed hands recently, and there were also talk among dealers that Iraq was chasing Thai whites for shipments in February as premiums softened.
"We've done a few deals around the 50 to 60 points premiums for Thai raw sugar. Refined values are suppressed mainly due to the March-May spread in London," said a dealer in Singapore. "Everyone is trying not to have to roll their position down the board, so they are willing to push down values in order to make a sale within this month," said the dealer, referring to steady sales before the March contract expires in mid-February.
Thai white sugar was offered at premiums of $15 to $25 to London's March contract, down from as high as $28 last week and $40 offered two weeks ago. Indian sugar, which competes with Thai whites, was steady at up to $620 a tonne because of a strong rupee. India, the world's largest sugar consumer, is estimated to produce 25 million tonnes of sugar in the crop season starting last October, higher than the annual demand of about 22 million tonnes, leaving room for exports.
India, which had allowed 1.5 million tonnes of exports under a scheme called Open General Licence (OGL) in the 2010/11 crop year ending September, recently issued a formal order for unrestricted exports of 1 million tonnes. Traders said that more exports would push Indian sugar prices down to at least $600 a tonne. "FOB value is currently offered at between $610 and $620. The Indian government is scrutinising the proposal to allow fresh OGLs which are expected soon," said a dealer in India. "This may put pressure on the Indian prices."
THAI RAWS, WEEKAHEAD Premiums for Thai high polarisation or hipol raw sugar for prompt shipment were unchanged at between 50 and 70 points to New York's March contract, and were likely to hold steady next week, given the current demand.
J-spec premiums were at 25 to 30 points to March, hardly changed from last week's levels. About 44 million tonnes of cane have been crushed in Thailand since the season began in mid-November, with around 4.3 million tonnes of raw sugar produced so far, according to dealers' estimates.
Thailand, the world's second-largest sugar exporter, is expected to see a record 2011/12 sugar output of 9.9 million tonnes and export 7.5 million tonnes in 2012 despite the country's worst floods in at least 50 years. "There's routine buying happening. Small cargoes have been shipped to Japan and I heard there are also hipol Thai shipments to Indonesia," said another dealer in Singapore.
"Iraq is buying quite a bit of white sugar. In January, it bought pretty close to 50,000 tonnes, and then it's lined up to buy another 40,000 tonnes of whites. There are also a couple of cargoes for raws to China, Vietnam and Malaysia." March raw sugar futures on ICE fell 0.21 cent to close at 23.64 cents a lb on Tuesday, the lowest since January 12. London March white sugar futures finished down $4.00, or 0.6 percent, at $630.20 per tonne.
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