Thai depressed by RI's delay of sugar shipment

Thai depressed by RI's delay of sugar shipment

BANGKOK (Reuters): The Thai white sugar market was depressed by market talk that Indonesia had delayed shipments of 100,000 tons of sugar from Thailand due to economic turmoil, trade sources said.

Trade reports South Korea sold back up to 200,000 tons of sugar from Guatemala to traders due to the economic crisis also depressed the market further.

Sources said even though the contracts were not canceled, the talk of delay -- from January to March and April -- sent negative vibes through a sensitive market which has been jittery about the impact of the regional crisis on consumption of sugar.

Indonesia has already bought 700,000-800,000 tons of white sugar from Thailand but a big chunk of the contracts are yet to be executed, they said.

"We are checking around for confirmation. The news was negative because the delay indicated that there could be some problems on the Indonesian side," said a dealer with a major U.S. trading house.

"The market paid a lot of attention because Indonesia is a big buyer. It could be the biggest buyer this year in the absence of China, and South Korea has already bought a lot from South America," he said.

China, Indonesia, South Korea and Japan were among major buyers of Thai sugar.

But the shipment during the first half of this month seemed to move smoothly. Shipping sources told Reuters that offtake from Indonesia this month was active.

Vessels were shipping 60,550 tons of white sugar to the country between Jan 11-16, they said. Louis Dreyfus and Tate and Lyle were among buyers.

The white premium of Feb/March delivery was offered at $15 per ton over London futures but without bids.

The raw sugar market was quiet in the absence of demand. Thai raw premiums for February/March shipment were flat. March/May was quoted around 10/20 points over New York's Coffee Sugar and Cocoa Exchange.

May/July was offered 35/40 points over CSCE without any bid, trader said.

A trader from one prominent Japanese house said Korea has already sold back 200,000 from 250,000-300,000 tonnes of raw sugar it bought earlier from Guatemala.

But another trader from a European house said he heard the sell-back was only 30,000-40,000 tonnes although there has been attempt to sell more.

"This report is a double-edged sword for Thai sugar. If South Korea did really sell back, the question is whether it will buy from Thailand immediately to cover this amount," said a sugar mill executive.

"If it does, good for us. But if they sold because of short- term financial hiccups and have no intention to buy any time soon, there will be too much sugar sitting there in the market to depress everybody, us included,' he said.