Raw sugar from the Philippines struggled to find buyers because main market Japan is well stocked for now, while a drop in London whites futures from record highs spurred buying of Thai sugar, dealers said on Wednesday. The Philippines offered the J-spec variety, or low quality sugar favoured by Japan, 40 to 80 points above New York futures, but there were no reports of fresh deals.
Philippine sugar producers can export as much as 200,000 tonnes raw sugar to the world market this year on top of its US quota commitments, with local output of the sweetener expected to hit a three-year high. Last month, the Philippines Sugar Regulatory Administration said Japan had ordered 37,000 tonnes of raw sugar and Indonesia for 8,500 tonnes.
"They (Philippine dealers) are desperate to get the sugar out. But because quality is poor, so nobody is buying it the quality is inconsistent," said a dealer in Singapore. While there were no takers for Philippine sugar, dealers said there was an increase in demand for Thai white sugar as consumers took advantage of the decline in London futures.
"But there's a little bit of a pick-up in physical business for Thai white sugar. I think $80 is a good premium for whites, although I've done deals at lower levels. For raws, nothing is moving yet and I haven't seen anything done." New York October raw sugar on ICE dropped 0.81 cents to end at 28.16 cents a lb on Tuesday, its lowest settlement since July 6, on worries about the state of the global economy.
London October white sugar on Liffe fell $17.70, or 2.3 percent, to close at $752.30 per tonne - off a lifetime high at $890.1 in mid-July. Thai white sugar was offered at premiums of $70 to $80 a tonne above London futures, down from $90 premiums last week. Dealers awaited a Thai Cane and Sugar Corp tender of 30,000 tonnes of raw sugar from the 2011/12 season on Thursday - its sixth tender so far this year. The TCSC offers J-spec raw sugar.
There were no offers ahead of the tender for Thai J-spec, whose premiums have tumbled to 80 points above New York's spot month contract, currently October, from as high as 500 points in July before the Philippines decided to sell excess sugar. "Japanese buyers are still quiet, but they might want to buy more J-spec sugar for October to December shipment," said a dealer in Bangkok.
"There's buying interest for hipol at 90 point premiums, but I don't see any sellers. Thai whites for prompt shipment are being offered at $80 premiums in containers." There were no offers for the widely traded high polarisation, or hipol Thai raw sugar. Premiums stood at 180 to 220 points above New York's October contract last week.
WEEKAHEAD Dealers expected more activity in the white sugar market next week if London futures extended declines, but Philippine raw sugar may still struggle to find buyers. "Many traders have offered Philippine sugar but as far as I know, I don't think Japanese refiners are buying more sugar at this moment," said a dealer in Tokyo.
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