SINGAPORE: Raw sugar premiums bounced higher after a drop in New York futures spurred buyers in Southeast Asia, but higher-than-expected output in Thailand was likely to put pressure on prices in the coming weeks, dealers said on Friday.
High-polarisation, or hipol, Thai raw sugar for prompt shipment was offered at premiums of 210 points after New York's May contract fell 0.21 cent to close at 26.50 cents per lb on Thursday. Offers stood at 190 points last week.
"I guess the demand is still there from the Philippines and Vietnam, but most buyers are on the sidelines because of a bigger crop in Thailand," said a dealer in Singapore.
"There will be more sugar coming and I think Thailand is also eager to sell," he added.
Thai raws for the Japanese market, or Jspec, changed hands at premiums of 120 to 130 points to New York futures for May delivery, steady from last week.
Thailand, the world's second-largest sugar exporter after Brazil, is forecast to produce around 7.8 million tonnes from the current 2010/11 crop, up 14.7 percent from an initial estimate of 6.8 million to 6.9 million tonnes.
But the physical market was abuzz with talk that Thailand could produce 8.0 million tonne of sugar from around 80 million tonnes of cane output, the highest ever.
Bigger output from Thailand would weigh on prices, especially with main consumer India expected to start selling more sugar in the international market.
India, which consumes about 22-23 million tonnes of sugar annually and is also the world's second-largest producer after Brazil, is likely to produce 25 million tonnes in 2010/11, up 33 percent from the previous year.
It will begin shipping half a million tonnes of sugar for export from the end of April.
Looking ahead, dealers expect offers from India to put more pressure on Thai white sugar, which was offered at premiums of $20 to $25 to London futures, down from $30 to $40 last week.
Indian white sugar premiums were steady at $40 to London's May white sugar, which rose $1.90 to settle at $707.70 a tonne on Thursday.
India began offering white sugar in the physical market since late last year as local dealers resold some of the sweetener, which they had bought in the previous year, in anticipation of a surplus.
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