THAILAND: Premiums continue to slip
Published: 08/03/2012, 10:44:01 AM
Cash premiums for sugar in Thailand have dropped this week and may face further declines as crushing gathers pace in major sugar exporting countries Brazil and Australia, but any significant declines will likely be limited due to concerns over India's delayed monsoons, according to Dow Jones.
Thai Hi-Pol for prompt shipment is being quoted around 230 points above the front-month October New York contract, down from around 260 points above the October contract last week, a trader in Bangkok said.
October raw sugar futures on New York's InterContinental Exchange shed 0.5% on week to settle at 22.04 U.S. cents a pound Thursday, the lowest front-month settlement price since July 5.
The likelihood of an El Nino developing later this year will likely benefit Australia's sugar cane harvest, traders said.
In the last three months, the probability of the Southern Oscillation Index, or SOI, reaching El Nino thresholds by late spring in Australia has jumped from 53% to over 80%, Paul Deane, senior agricultural economist at ANZ, said in a note Thursday.
An El Nino increases the chance of dry weather late in the season for Australian sugar mills, allowing them to maximize harvest rates, Deane said, projecting output in the crop year that began July 1 to reach 4.3 million tonnes, up 13.2% on year.
Brazil's main sugar cane crush, plagued by persistent rains since the harvest began in April, sped up dramatically in early July due to better weather, closely watched sugar and ethanol association UNICA said July 25.
Mills in the key center-south region, which produces nearly 90% of the country's sugar cane, crushed 42.18 million metric tonnes in the first half of July, up 3.9% from a year earlier, UNICA said in a biweekly report.
Meanwhile, the monsoon in India has been slow to cover the country, intensifying the already dry conditions in many sugar-growing regions.
Sugar prices are consolidating as the market weighs Indian threats versus the Brazilian crop's progress, Societe Generale said in a research note earlier this week, putting support for ICE sugar at 21.59 cents/pound in the coming sessions.