India, the world's largest sugar consumer, was estimated to have bought 250,000 tonnes of raws recently but no details were available, while Thai premiums bounced on lower futures prices, dealers said on Wednesday. India was also making inquiries to buy Thai white sugar, with a few deals expected to take place in September and October.
Premiums for Thai refined sugar held steady at $5 to $7 over London futures, although offers were also heard at a discount. "Definitely, we've seen vessels shipping more white sugar from Thailand to India recently, and with the futures market lower, they will take the opportunity to do more business," said a dealer in Singapore. "However, I think the mills are sold out which means the sugar is in the traders' hands," he said.
October raw sugar dropped more than 3.3 percent to end at 20.87 cents per lb on Tuesday, down 16 percent from a 28-year high at 24.85 cents hit last week. London's October shed 60 cents to close at $520 per tonne, well below a record high of $603.6 struck last week. Sugar futures have dropped on profit taking and improving crop prospects in India, but suspected consumer buying helped cushion the fall, dealers said.
India's top weather official said the monsoon was likely to start withdrawing a week to 10 days late this year, boosting depleted reservoirs and helping winter crops. "In positive news there are (unconfirmed) reports that India may have purchased over 250KT of raws over the weekend and Mexico announced intentions to issue an extra 207KT in import licences," Commonwealth Bank of Australia said in a daily report.
Other dealers said various trading houses also mentioned the suspected Indian sugar purchases in their internal reports and details were sketchy. "Our guess is there had been some selling back of Indian purchases, which led to the fall of futures markets, and probably some further buying when the market came down," said another dealer in Singapore.
"It's mostly likely when the weekend came and prices were low, people might have bought the same cargo back. It's very hard to tell exactly what's being done, to be honest. I've seen the quarter-of-a-million-tonne number mentioned." India mainly buys raw sugar from Brazil, where the sweetener for prompt shipment was offered at a discount of 60 to 70 points to New York futures from 100 points last week, which helped push up Thai premiums to 50 points from zero.
Dealers would also watch as Pakistan's cabinet meets on Wednesday to consider ensuring sufficient sugar stocks ahead of the Muslim Eid ul-Fitr festival in September, while Indonesia's raw sugar purchases could help improve sentiment in the market.
Pakistan has been buying sugar since the start of the year after the output in the 2008/09 crop fell to 3.2 million tonnes, from 4.7 million tonnes the year before. Indonesia will allow state firms to buy 180,000 tonnes of raw sugar before the end of the crushing season in November, while the country's raw sugar imports permits have exceeded an initial target by 140,000 tonnes due to a supply shortage.
Thai dealers said they expected Indian buyers, mostly from the food and beverage industries, to seal deals to buy small lots of around 1,000 tonnes each of Thai white sugar in September and October. "More enquiries have come but I think they are only going to buy hand-to-mouth as prices remain high despite passing through a corrective phases," said a Bangkok-based dealer.
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