Indonesian news bolsters Thai sugar premiums
Indonesian news bolsters Thai sugar premiums
BANGKOK (Reuters): News that Indonesia is expected to hold a
tender soon to buy 500,000 tons of raw sugar and 200,000 tons of
whites underpinned Thai sugar premiums in an otherwise dull
market, trade sources said yesterday.
But the impact of the news was not strong enough to push
prices up as traders said sugar from Brazil and Australia also
stood a good chance of being bought in the tender, details of
which are yet to be released.
"The news helped underpin premiums which could otherwise have
fallen without the fresh lead. We expect more details in two
weeks... It did not boost premiums much because basically, the
sugar market needs much more world demand," a Singapore trader
said.
"Moreover, Thailand might not be the only viable origin. It
has a freight advantage, no doubt. But Brazil and Australia will
surely price their products very aggressively," he said.
Thailand is believed to hold a sizable amount of raw sugar in
warehouses while it has only small amount of white sugar left for
sales.
"If the price is right, then there are incentives to remelt
raw sugar to produce whites. But I doubt if that will be the
case," said an executive from a major Japanese trading firm.
Some traders treated the news of possible purchase of 500,000
tons of raw sugar by Indonesia with skepticism because Jakarta is
known to be a white sugar buyer as it lacks adequate refining
facilities.
"Actually, I'm surprised. What will Indonesia do with such
amounts of sugar? Could it be that the government is going one
step further in saving money by encouraging people to use raw
sugar which is cheaper?" said an executive at one mill.
The Philippines was absent in the Thai sugar market. Traders
said they doubted if the country, which announced it would soon
buy raw sugar, would opt for Thai origin sugar as first choice.
"The Philippines normally goes for high pol sugar. Thailand
produces 98 degrees pol sugar which is alright. But its raw sugar
has been left in warehouses for months now and the degrees of
polarization have dropped," another trader said.
"Now it is the season in Australia and the country also
produces very high pol sugar," he said.
Thai raw premiums for July/September were quoted at 100/120
points per pound over New York's Coffee Sugar and Cocoa Exchange.
January/March was offered at 90 points per pound over CSCE.
White premiums for nearby shipments were barely changed at
US$15 per ton over London.