Thai sugar premiums are expected to hold onto recent gains over the next few days, backed by expectations of a smaller 2004/05 crop with new offers remaining thin, traders said on Monday. Thai raw sugar premiums for March-May shipment were at 132/142 points over the New York Board of Trade raw sugar futures on Monday, versus last week's 110/140 points over. "Most exporters are not comfortable selling more at the moment due to concerns about the crop," said one trader.
Thai exporters had sold forward contracts for about half of the sugar they expect the country to produce in 2004/05 through to March shipment, traders said.
"They would be confident to sell more after the second half of February when they could see a clearer picture of the crop," said another trader.
Industry and officials expect the 2004/05 crop to be much smaller than the previous crop due to a lack of rain since October.
Estimates of the 2004/05 crop vary. Mills and officials estimate the crop at around 50 million tonnes, down from about 55 million tonnes estimated several months ago.
The American trading firm Cargill estimates the crop at 54 million tonnes, and French trading house Sucden puts the figure at 53 million tonnes.
Traders expect the crushing season to end by mid-March, about a month earlier than usual on expectations of the smaller crop.
The 2004/05 harvest has been underway for 2 months with all Thailand's 46 mills crushing cane since November 23, mills said. The crop year runs from October to September and the harvest normally ends by mid-April.
Thailand, a major sugar exporter in Asia, produced 64.48 million tonnes of cane in 2003/04. Its main buyers are Japan, South Korea, Taiwan, Indonesia and Malaysia.
Thai exporters were keeping a close eye on India amid wide speculations that India would start buying white sugar after its crushing season ends in March/April.
"India might start buying white sugar in the second quarter of the year," said one trader.
Traders estimate India would want to buy almost 2 million tonnes of white sugar, probably for June, July and August shipment.
Thai millers are estimated to have around 1 million tonnes of white sugar, both 100 ICUMSA and 45 ICUMSA, unsold for April onward shipment, traders said.
ICUMSA measures the colour of sugar and the lower the ICUMSA level, the higher the degree of whiteness. ICUMSA 100 is considered consumer-grade sugar.
In the secondary market, Thai 100 ICUMSA white sugar premiums for March-April were offered at $30 over London prices with bids at $25 over on Monday, traders said.
Taiwan bought some 10,000 tonnes of very high polarisation sugar at around $300 per tonne, free-on-board, FOB, earlier this month, one trader said.
"The sugar is believed to come from Europe,"" said the trader.
Thai millers had no plans to produce very high polarisation raw sugar this year, thanks to high white sugar prices, traders said.
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