Premiums for Thai raw sugar fell after most producers and traders appeared reluctant to offer the sweetener despite a jump in global prices, dealers said. On Wednesday, global sugar prices settled up 0.20 cent, or 1.6 percent, at 12.97 cents a lb, a three-week high. But most sellers still believe prices are too low to sign any large scale trade deals.
As a result, large inventories have piled up at mills' warehouses when Thailand, the world's biggest exporter after Brazil, is set to produce 11.1 million tonnes of sugar in the current year to September, marginally lower than the record 11.3 million tonnes produced in the previous year.
Trade and industry experts initially expected Thailand's 2014/15 output to be 10.3 million-10.5 million tonnes.
Reuters analyst Wang Tao said New York May sugar may break a support at 12.84 cents per lb and fall further to the next support at 12.56 cents, as its rebound from the March 31 low of 11.91 cents may have completed.
"We know that sugar prices have jumped but the rise is too small to entice big sellers. We have not heard of any big trade deals in the past few days," said a dealer in Singapore.
The premiums for the widely traded high polarisation, or hipol raws, were at 32 points above the front-month New York contract, down from 35 points last week.
The premium for J-spec, the low-quality Thai raws favoured by Japanese buyers, was quoted at 45 points above the New York contract. Thai white sugar premiums were at $15 a tonne to London futures, unchanged from last week.
On Wednesday, May white sugar closed down 40 cents, or 0.1 percent, at $366.40 per tonne.
The Indian government might consider giving cash-strapped sugar companies an incentive to export white, or refined, sugar as long as mills agree to pay the dues they owe to millions of cane growers, Food Minister Ram Vilas Paswan said on Wednesday.
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