Raw sugar from the Philippines, the low-quality J-spec quality favoured by Japanese consumers, was offered in a wide range of premiums from as little as 40 points to as much as 500 points above New York futures, with no deals.
The Philippines wants to sell more than 300,000 tonnes of sugar this year, up from 200,000 tonnes targeted previously, and will for the first time also offer refined sugar, agriculture minister Proceso Alcala said on Tuesday.
But dealers said quality concerns and the high ICUMSA level turned off buyers. Thai Jspec was quoted at premiums of between 80 points to 100 points for prompt delivery.
"Unfortunately, it's true the Philippines is not used to having to focus on what buyers want. I guess that's what you get if you haven't been in the world market for a few years," said a dealer in Singapore.
"With the Thais, most mills will give you a fairly standard quality, but there's a variability in this Philippine production."
The Phillipines expects to close the 2010/11 season in end-August with 780,000 tonnes of sugar stocks, while raw sugar output in 2011/12 is likely to hit at least 2.4 million tonnes.
The Philippines wants to sell sugar this year because of a surplus in domestic production, but so far only 66,000 tonnes have been booked for shipment to Japan, Indonesia and South Korea.
These are the first shipments outside the US quota that the Philippines has made since the 2007/2008 crop year, as domestic output hits a three-year high.
"The Philippines is still offering sugar at premiums, but the demand for Thais is also muted because most people have covered their requirements," said a dealer in Bangkok.
"Thailand has a lot of sugar to sell."
The International Sugar Organization (ISO) expects Thailand, the world's second-largest exporter after Brazil, to produce around 10 million tonnes of sugar in 2011/12, topping its 2010/11 output of 9.62 million tonnes.
The widely-traded Thai high polarisation or hipol variety fetched premiums of 200 to 220 points above New York's prompt contract, October, but bids only appeared at 120 points.
Brazilian raw sugar premiums stood at 75 to 80 points for prompt shipment, almost at par with Thai raws for next year's delivery, which stood at 60 to 70 points above futures.
Bids for next year's Thai sugar stood at 20 to 30 premiums, suggesting that consumers were aware of rising output. Thai white sugar premiums were steady at $70 above London's October contrac.
WEEKAHEAD, INDIA SUGAR ALSO WEIGHS
While a lack of demand could force dealers to cut premiums for Philippine sugar, the value of Thai sweetener could be under pressure from more sales from India, the world's second-largest producer after Brazil.
India has decided to allow another 500,000 tonnes of unrestricted sugar exports, which would come on top of one million tonnes of shipments allowed so far this year.
"There's Indian sugar around and there's Philippine stuff coming out of the blue, so I think buyers are generally comfortable with supply," said the dealer in Singapore, referring to a lack of activity in the physical market.
"This Philippine stuff floating around has taken off a bit of pressure as well and is confusing the whole situation. No one is quite sure what to bid/offer on Thai sugar."
New York October raw sugar on ICE reversed to close down 0.36 cent to settle at 27.48 cents a lb on Monday, while October white sugar on Liffe fell $7.70 to end at $735.80 per tonne.
Copyright Reuters, 2010