Premiums on sugar from Thailand, Asia's largest exporter of it, are expected to hold firm over the next few days, backed by demand in Asia, traders said on Tuesday.
Offers for Thai 100 ICUMSA white sugar, considered consumer grade, for March-April shipment were steady at $33 over London prices, or $492 a tonne free on board on Tuesday. ICUMSA measures the colour of sugar.
The lower the ICUMSA level the higher the degree of whiteness. There was talk in the market that a Vietnamese buyer had bought around 2,000 tonnes of raw sugar from Thailand over the past week, traders said.
Vietnam was expected to import 500,000 tonnes of both raw sugar and white sugar this year on expectations of domestic shortfalls, they said. Indonesia and the Philippines were also expected to show buying interest in the next few weeks, they added.
The Thai cabinet agreed on Tuesday to raise domestic sugar prices by three baht a kg to 14 baht a kg ($0.36), ex-mill, after farmers threatened to hold a protest. The price of domestic refined white sugar was raised to 14.65 baht a kg, ex-mill.
The price rises could boost Thailand's next crop, officials and traders said. "It's positive news for the industry. It will be a very good incentive for farmers to keep growing cane," said Buntline Ketosis, a director of the Thai Cane and Sugar Board.
The price rise should boost the income of cane growers by around three billion baht more ($77 million), he said. "I am so delighted that I wanted to cry after receiving the news," said Siphon Duangchampa, head of the federation of sugarcane farmers in the north-east, the largest cane growing area.
There was talk in the market that the Commerce Ministry would also decide in the next few weeks to ask mills to allocate another 200,000 tonnes for domestic consumption to solve a shortage.