Asia Sugar-Indian prices up on monsoon fears;Thai premiums high

http://in.reuters.com/article/2012/07/24/sugar-physicals-idINL4E8IO0TV20120724

July 24, 2012 at 3:44 PM


By Lewa Pardomuan

SINGAPORE, July 24 (Reuters) - Indian white sugar prices have risen more than one percent in the past week because of gains in the domestic market and concerns over poor rainfall, while high Thai premiums turned off buyers, dealers said on Tuesday.

Indian whites, which compete with Thai refined sugar, were on offer at $600 a tonne FOB or above, higher than $590 last week and $520 in late June. The most active August sugar contract on India's National Commodity and Derivatives Exchange struck a contract high on Monday.

"Indian internal prices are still very high. I think they are holding sugar right now. They are saying the drought has affected sugar cane areas, so it's quite tight in India," said a dealer in Singapore.

"White sugar is being offered at $600, although I also heard $630 has been quoted too. But nothing is traded at these levels."

India's monsoon rains are now expected to be below average, the government said on Monday, turning to contingency plans as rainfall has been about a fifth below normal so far and recent rains have not been enough to ease concerns.

India is the world's largest sugar consumer and the second-largest producer after Brazil.

 

Thai white sugar premiums slipped to $40 to $45 to London's October contract from a one-year high at $55 last week because most consumers had already bought enough sweetener before the Muslim fasting month of Ramadan.

But Thai raw sugar premiums remained at 2-year highs at 300 to 320 points to New York's October contract, with no reports of deals. Thailand is the world's second-largest exporter after Brazil, where premiums were much lower.

Premiums for J-spec, or raw sugar for the Japanese market, were quoted as high as 325 points to New York futures from 270 to 290 points last week.

Brazilian raws were traded overnight at 15 to 20 point premiums for August/September delivery, dealers said, while sugar for September was reported to have been traded at discounts of 10 points last week.

Premiums for Brazilian raws have come down from around 40 points a few weeks ago as crushing progresses despite delays caused by heavy rains.

Brazil's center-south sugarcane industry, which accounts for 90 percent of the country's sugar output, estimates it will be able to recover the days of production lost in recent months to wet weather by the end of the season late in 2012.

 

CHINA, WEEK AHEAD

Thai raw sugar premiums could slip next week if buying interest remains weak, while China could slow down after recent strong purchases. China, the world's second-largest consumer after India, imported 1.44 million tonnes of sugar in January to June period, up 177.54 percent.

"China had a very tight stock situation in late 2011, early 2012, evidenced by very high domestic prices. Now, the government and private buyers are rebuilding stocks," said Tom McNeill, director of Green Pool, a commodities analyst based in Brisbane.

"A combination of strong imports and a better crop in 2012/13 could see China building significant stocks to perhaps 4 million tonnes by the end of September 2012. That should bring Chinese domestic sugar prices down." 

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