Thai sugar was offered at premiums almost double from a week ago as recent imports of nearly 800,000 tonnes of Brazilian sugar by Asian countries indicated demand was on the rise, dealers said. The widely traded high polarisation, or hipol, Thai raws for delivery over March to May were offered at 60 points above New York futures, up from 35 points in the previous week.
"Although deals for Thai sugar were few and far between, there have been substantial imports from Brazil. Of the total January shipments, Indonesia has bought a sizeable quantity," said a dealer by telephone from Singapore. The other key buyers of Brazilian sugar this month were China and Dubai. Imports of Brazilian sugar by Malaysia, which bought large quantities in the fourth quarter of 2014, were relatively weak this month, the dealer said.
But the supply of sugar from Brazil could be hurt by a recent move by the government to restore a fuel tax on gasoline and diesel. This could encourage the world's top sugar exporter to produce more ethanol rather than sweetener. On Wednesday, March raw sugar climbed to 16.16 cents a lb, the highest level since November 25. Premiums for J-spec, the low-quality Thai raws favoured by Japanese buyers, were quoted at 45 points above New York's March contract, against 30 points last week.
Thai white sugar premiums were at $20 a tonne to London futures, down from $30 last week. March white sugar on Wednesday closed up $1, or 0.2 percent, at $408.30 a tonne. There's some demand for Thai whites but only in containers, said the dealer. Sugar prices in India, the world's top consumer and second biggest producer, continued to rise, posting a jump of 1.2 percent to $474 per tonne on higher purchases by stockists and bulk consumers.
Mills in India produced 7.5 million tonnes of the sweetener between October 1 and December 31, more than 27 percent higher than a year earlier as crushing in the northern state of Uttar Pradesh started a week in advance. Indian supplies could compete with Thai sugar if New Delhi agrees to incentives to help mills ship out the raw variety. India could approve an increase in the raw sugar subsidy paid to mills to about 4,000 rupees ($64) per tonne as it looks to cut large stockpiles.
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