Thai sugar trade still thin as pressure on price mounts

Sugar trade in Thailand was expected to be thin over the next few weeks with prices under pressure from falling London futures prices and sluggish overseas demand, traders said on Monday.
Offers for Thai 100 ICUMSA white sugar, considered consumer grade, for August shipment, were at $10 over London prices, or $470 a tonne, free on board, down from around $489 last week and $517 this month.
ICUMSA measures the colour of sugar. The lower the ICUMSA level the higher the degree of whiteness. "Our prices are expected to drop a little bit lower in line with London futures and because of slow demand," a trader said.
London white sugar futures closed off two-month lows at $445.00 per tonne on Friday due to funds and traders selling after trading around $463.60-443.00.
Another factor pushing Thai sugar prices a little bit lower over the next few weeks was Vietnam's prolonged delay in buying after Indonesia, Southeast Asia's largest consumer, said it was unlikely to import more sugar this year, traders said.
"After Indonesia shut the door, Vietnam has become a star right now and it could wait until August to decide where it will buy," a trader said. The Vietnam government has approved the import of 150,000 tonnes of both white and raw sugar, but has not issued import licences yet.
"They could wait for lower prices," another trader said. India was expected to win a share of the 150,000 tonnes, as its prices were lower than Thailand's, the dealers said.
Indian sugar was quoted at $450 per tonne on Monday, around $10 per tonne lower than Thailand's. "India has ample supply for export so it could sell to Vietnam if its freight costs were competitive," a trader said.
India was expected to produce 19 million tonnes of sugar this year while domestic demand was around 18 million tonnes, according to Indian Sugar Manufacture's Association. Much of the one million tonne surplus has been exported, mostly to Pakistan.
Thailand, Asia largest sugar exporter, has been under pressure as good rains in most growing areas over the past few weeks was likely to boost the new crop significantly, yet demand remained thin, an exporter said.
Thailand produced 46.68 million tonnes of cane in the current crop ending September, down slightly from 47.81 million tonnes in the previous crop due to drought.
But the premium for Thai sugar was expected to stay steady at $10 per tonne over London prices, traders said.
"The premium needs to stay around the current level to compensate for the losses from lower prices," a trader said.