Indian sugar prices on the rise while Thai premiums slip further
Published: 08/09/2012, 11:39:16 AM
Indian white sugar prices rose further this week after poor monsoon rains prompted exporters to hold back stocks, while neighbouring Pakistan may issue export licences soon, according to Reuters.
In Southeast Asia, Indonesia was to release import permits for 260,000 tonnes of raw sugar, an Agriculture Ministry official said, as the region's largest consumer looks to increase stock levels for next year.
Indian white sugar was quoted at as high as US$640 a tonne free on board, higher than US$630 last week and US$600 two weeks ago. Thai whites were offered at up to US$20 premiums to London futures, making it much cheaper than Indian sugar.
"The price is really high. Some are quoting sugar at US$630 and US$640, and even at those prices, you may not be able to get it. They are holding the cargoes. They don't want to sell," said a dealer in Singapore.
"I think India would rather sell sugar in the domestic market," said the dealer, referring to the world's top consumer.
India has released 400,000 tonnes of additional non-levy sugar for the September quarter as it aims to rein in prices during the Muslim holy month of Ramadan, which ends in about two weeks, and a later Hindu festival, and is also considering imposing a tax on exports.
Pakistan could take advantage of India's absence in the export market by issuing licences to traders to sell sugar in the international market, having officially announced in May it would allow the export of 200,000 tonnes of whites.
"They are gearing up to export sugar again. Nothing is firm but they have been offering sugar at below US$600 a tonne. The licences are expected to be issued any day now. They are already marketing their sugar," the Singapore dealer said.
Thai refined sugar, which competes with Indian whites, was traded this week to consumers in Southeast Asia at premiums of US$15 to US$20 a tonne to London's October contract. Premiums stood at US$20 to US$30 last week.
But differentials for high polarisation or hipol raw sugar rose to as high as 320 points above New York's October contract from 300 points last week because of tight supply in Thailand, the world's second largest exporter after Brazil.
Thai raw sugar premiums have risen their strongest in two years due to high demand for white sugar for the Muslim fasting month of Ramadan and tightening stocks after the end of the crushing season on May.
"I think Thailand has sold out sugar from the recent crop. There's not much raw sugar left. The next crushing season is in December, so Indonesia will have to wait if they want to get Thai sugar," said another dealer in Singapore.
Indonesia buys about 2 million tonnes of raw sugar a year, mainly for industrial use and mostly from Thailand, although it shipped in 118,129 tonnes of white sugar last year.
This year, it issued import permits for 240,000 tonnes of raw sugar, of which only 182,000 tonnes was delivered from Thailand before an April deadline.
Thai raw sugar premiums could stay at a 2-year high next week, although a lack of demand and arrivals of more sugar from Brazil could eventually weigh on prices. Brazilian raws were being offered at 10 to 25 premiums to New York futures.