Asian sugar: lower futures spur buying; Thai crushing begins

Falling sugar prices attracted interest from several buyers in Asia who still need to cover their requirements in the final quarter of the year, while cane crushing started in Thailand after minor delays caused by floods. At least four millers in Thailand have started crushing cane, with less than 10,000 tonnes of sweetener already produced before activity picks up next month in the world's second-largest exporter after Brazil.
ICE March raw sugar futures fell as low as 23.86 cents a pound on Monday, its weakest since June, before ending slightly higher. Sugar and other soft commodities were under pressure due to the euro zone debt crisis. "There are a lot of bits and pieces of buying because the market has come off. It has attracted a lot of people, who haven't covered their December tonnage," said a dealer in Singapore who trades Thai sugar.
"But it's going to be in small amounts. We've done a few trades, mostly for Malaysia. They take raws for refining." Malaysia's cabinet is expected to approve a purchase of slightly less than three million tonnes of raw sugar in the next few weeks, a Malaysian industry source close to the deal told Reuters on Friday.
Malaysia, which consumes about 1.4 million tonnes of sugar a year, normally signs long-term contracts every three years to rebuild stocks and meet domestic demand as the country has minimal domestic production. Thai high polarisation, or hipol, raw sugar for January-March delivery was offered at 135 point premiums to New York's March contract, down from 140 points last week, with bids at 110 points
Thai raw sugar for March-May delivery was bid at 75 points over New York's March contract, with offers at 85 points. Offers were also heard at 110 points, with bids at 90 points. Thai raw sugar for the Japanese market, or J-spec, was practically sold out before more supply arrives in the physical market during the crushing season, which has produced between 5,500 and 6,000 tonnes of raws so far.
Thailand's worst floods in decades may cause minimal damage to sugarcane in the 2011/12 crop year, but that output could be revised down to 95 million tonnes from 100 million, though still within sight of last year's record of around 95.4 million tonnes.