Thai sugar premiums seen steady, new offers thin

Thai sugar premiums are likely to hold steady this week, with new offers remaining thin ahead of the start of the 2004/05 harvest later this month, traders said on Monday. Bids for Thai 100 ICUMSA white sugar premiums for March-April 2005 shipment were steady at $10 over London prices on Monday, unchanged from last week. Exporters offered Thai 100 ICUMSA whites at $16 premiums over London prices for March-April shipment on Monday, up from $12 quoted last week. ICUMSA measures the colour of sugar.
The lower the ICUMSA level the higher the degree of whiteness. ICUMSA 100 is considered consumer-grade sugar. "Very few exporters are offering, while many others are holding back their sales.
They are having second thoughts about the crop," said one trader. "They are now saying the crop could be cut further to about 55 million tonnes due to lack of rain in most growing areas in October," said another trader.
Traders expect cane output from the 2004/05 crop to drop to around 58-59 million tonnes from 64.48 million tonnes in 2003/04, due to drought and reduced growing areas.
The state Thai cane and Sugar Board estimates the 2004/05 crop at 60.86 million tonnes. Thailand is one of Asia's major sugar exporters. Its key buyers are Japan, South Korea, Taiwan, Indonesia and Malaysia.
Thai exporters had sold forward contracts to international trading firms only through to February shipment, traders said. The harvest season for 2004/05-cane crop is expected to start later this month, officials said.
The harvest and crushing season for the previous 2003/04 crop began on November 23 and lasted until April 30. On Friday, 3,000 cane farmers met Prime Minister Thaksin Chinaware, who repeated his promises on the cane price farmers would earn, traders said.
"(He) told farmers to count on him to deliver on what he has promised," said one trader. "He also said the cane price for the next 2005/06 crop would be higher than (that) announced for the 2004/05 crop."
Planting for the 2005/06 crop will not start until May. Thaksin said last month that the government would set the preliminary cane price for the 2004/05 (October-September) crop at 620 baht per tonne ($15.20) based on cane at 10 C.C.S sugar content, about 20-40 baht higher than production costs.
The matter is subject to approval by the cabinet.