Thai sugar premiums seen steady

Thai sugar premiums are likely to hold steady this week with new offers for shipments in 2006 remaining thin, traders said on Monday. Raw sugar premiums for March-May shipment were offered steady at 85 points over the New York Board of Trade raw sugar futures price without bids on Monday.
"Most Thai exporters are not offering. They expect a smaller crop, so they are not under a pressure to sell it," said one trader.
Traders and exporters say they expect the new crop to be harvested in November to produce 10-15 percent less cane at 40-43 million tonnes, or about 4 million tonnes of sugar, than the 47 million tonnes of the previous crop year due to drought.
Two million tonnes of sugar have already been allocated for domestic consumption with the rest left for exports for next year, traders said. Thailand is a major sugar exporter in Asia whose key buyers include Japan, South Korea, Taiwan, Indonesia and Malaysia.
Traders said they were keeping a close eye on a tender to be held by the Thai Cane and Sugar Corporation on September 28 to sell 218,666 tonnes of raw sugar for export next year.
"We expect several trading firms to participate. Many of them have yet to cover their positions for shipments in 2006," said one trader. TCSC said it would sell 85,333 tonnes of raw sugar for shipment between March 1 and May 15 and 133,333 tonnes of raw sugar for shipment between May 1 and July 15.
GOOD RAINS Heavy rain has fallen in most cane growing areas this month with flash floods predicted in the next few days in the north and north-east, Thailand's main cane growing areas.
"The rain is not expected to boost the crop because it came too late.
However, it will help prevent the crop from getting smaller," said one trader.
Farmers have asked for 850 baht a tonne ($20.77 a tonne) as a preliminary price for the new crop, up from 620 baht in the previous crop, citing rising productions costs due to high fuel prices, government officials said.
"We are due to discuss the price next month before submitting it for the cabinet's approval by November," said Buntline Ketosis of the Thai Cane and Sugar Board.
The preliminary price, usually set before the November-April harvest and based on the world price, is the price millers must pay farmers at the beginning of the harvest and crushing season.
In recent years, governments have given in to price demands from farmers threatening to disrupt the harvest due to the low preliminary prices set.