Thai white sugar active on RI offtake

Thai white sugar active on RI offtake

BANGKOK (Reuters): The Thai white sugar market was active amid offtake from Indonesia and confusion over domestic and export quotas, traders said.

The white sugar premiums for March/May delivery edged up to $21.00-25.00 per tonne over London against the bid of $15-17 last week and are seen edging higher.

Indonesia has sent ships to pick up substantial amounts of white sugar from Thailand since January. A total of 41,130 tonnes were shipped to the country during the last week of January.

At least an additional 180,000 tonnes of white sugar is scheduled to be delivered to the country between now and the end of this month.

But tightened supplies and confusion over the export quota was likely to push the white premium up further, traders said.

Last week, the commerce ministry announced it had raised the retail sugar price by 0.50 baht and shifted 30,000 tonnes of white sugar from domestic quota A to export quota C.

But the mills said they were confused as such orders should have come from the Cane and Sugar Board and wondered whether the order was valid.

And if the confusion was not cleared by the authorities, mills would not be able to shift their domestic quota for exports and that could cause near-term supply problems, they said.

Under the Thai system, sugar mills are obliged to produce white sugar for local consumption first before they can fulfil export quotas.

In the past, the authorities have sometimes been more flexible. But this year, because of the production problem and local shortages, the mills have been asked to stick to the guideline.

"This year we have a slight production problem as some mills miscalculated their strategies. If we can export some of the local quota now, it would help," said one sugar mill executive.

In contrast to the fizz in the white market, the raw sugar trade was flat as offtake from buyers were almost absent.

"There were not many ships coming in to take raw sugar. Mills complained that their warehouses are running out of space," said a trader from a Japanese trading house.

Thai raw sugar premiums for February/March deliveries were bid at 15 points over the Coffee Sugar and Cocoa Exchange (CSCE) without offers.

March/May was quoted at 15/25 points over New York on FOB basis, May/July at 40/55 and July/September at 80/100.