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.