Thai sugar premiums are likely to hold steady over the next few days, with exporters in no hurry to sell forward contracts for 2005 shipment because they see current bids as too low, traders said on Tuesday.
Exporters offered to sell Thai raw sugar for March-May 2005 shipment at a 100-point premium on New York CSCE futures on Tuesday, unchanged from last week. "Traders from international trading firms are bidding to buy Thai raw sugar for March-May shipment at around a 70-point premium over CSCE futures," said one exporter.
"What traders are bidding is still too low. I do not expect any deal to be done at this level."
Trade has been thin this past week, participants said. "One Japanese trading firm has sold some Thai raw sugar to another Japanese trading firm for March shipment at a 90-point premium over CSCE for Japan," said one trader.
Thailand is one of Asia's major sugar exporters. Its key buyers are Japan, South Korea, Taiwan, Indonesia and Malaysia. Thai exporters offered to sell Thai 100 ICUMSA white sugar premiums for prompt shipment at around $265-275 per tonne FOB on Tuesday, unchanged from last week.
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.
There has been ample rain in most sugar cane growing areas over the past several month and traders expect 2004/05 (October-September) cane production of between 58 million and 60 million tonnes, down from 64.48 million tonnes in 2003/04.
Some cane in the north-east, which produces about 40 percent of Thailand's crop, has been damaged by drought. Thailand's sugar cane crop usually runs from November to September. The harvest season has been delayed to late November in the past few years because of weather problems and disagreements over cane prices between millers and farmers.
The price of molasses, the by-product of sugar cane, was quoted steady at $60-62/tonne FOB on Tuesday from last week, traders said. "Indian buyers have been seeking to buy molasses.
They are bidding to buy around $55-58 for 2005 shipment," said one official at a large exporting firm. Thailand produces between 3 million and 4 million tones of molasses a year, 1 million is usually exported.
Its key buyers are Japan, South Korea, Taiwan and Indonesia. Traders said a world sugar conference, organised by F.O Lights and Thai Sugar Millers Corporation, would be held in the north-eastern province of Khan Karen December 8-9.
Key speakers would include Clemens Boonekamp of the World Trade Organisation and Russell Milton from European Commission.
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