Thai raw sugar premiums jumped to a five-month high as trading houses jacked up the value to compensate for losses in New York, while Indian white sugar prices were stuck in a range before the release of new export permits, dealers said on Tuesday.
Premiums for Thai high-polarisation, or hi-pol, raw sugar stood at 130 to 135 points to New York's front-month May contract, higher than 80 points last week. Premiums and futures move in opposite directions. But lower global prices raised hopes of renewed buying interest from main consumers such as China, which is likely to import 3 million tonnes of sugar in the current crop year, according to the International Sugar Organisation.
"I think these lower prices are bringing in more demand. It's not only in Asia but also worldwide. Egypt, for instance, did buy some sugar," said a dealer in Bangkok. The physical market was also abuzz with talk that China could be returning soon as New York's May contract plunged to an 11-month low at 21.78 cents on Monday on abundant global supplies.
"I can see there's some demand. Egypt bought sugar. There seems to buying interest from China, although I don't think I have the details," said another dealer in Singapore. Egypt's state-owned Sugar and Integrated Industries Company (SIIC) bought in a weekend tender 50,000 tonnes of Brazilian raw sugar at $534 per tonne, CIF, for July shipment.
Thai J-spec, or raw sugar favoured by Japanese consumers, was quoted at premiums of up to 80 points to New York futures, up from 45 points last week. Thailand is the world's second-largest sugar exporter after Brazil. Thai white sugar premiums rose to $45 a tonne to London's August contract from $23-$27 last week, but the whites market has been quiet in recent weeks because of competition from India.
Top consumer India is expected to produce enough of sugar in the next production season to allow exports for a third consecutive year, according to the Indian Sugar Mills Association (ISMA) Indian white sugar was quoted at $610 a tonne, slightly higher than last week's $600 a tonne.
ISMA is pushing for the government to allow another 1 million tonnes of exports to help trim bulging inventories, which would bring total exports for the season to 4 million tonnes. India has so far exported 2 million tonnes and agreed to export another 1 million tonnes which is awaiting details of quota allocation to mills.
"We don't know when the licenses will come out, and there are rumours they won't be available before May 10," the second dealer in Singapore said. "The thing is that some guys still have not shipped out sugar from the previous license. Also, they are not selling their cargo cheap even though global prices have dropped."
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