Trading of Thai sugar was thin on Monday and was likely to remain sluggish over the next few weeks as high prices, lifted by rallies of futures contract prices in New York, kept buyers on the sidelines, traders said. The premium on Thai raw sugar was quoted at 155 points over New York prices for March shipment, or around 12 cents per lb, traders said.
"Demand is there, but buyers can wait for lower prices as the current New York prices were quite high and buyers are not happy to buy at that price plus premium," one trader said. New York raw sugar futures, which set the global trend, rose to a 10-month high on Friday on speculative and option-related buying and the market was likely to grind higher on follow-through interest.
The March open-outcry sugar contract rose 0.17 cent to close at 10.48 cents per lb on Friday. The looming Christmas and New Year holidays would also help keep physical trade of Thai sugar thin, traders said.
Some pessimistic traders said they expected the premium on Thai raw sugar to dip a little over the next few weeks to compensate rises of futures contract prices, which could make physical prices more attractive.
"If New York prices remain firm, I think the premium should drop because we could not sell at such high prices," a Thai trader said. Traders were keeping their eyes on whether Indonesia, Southeast Asia's biggest buyer, would postpone the import of raw sugar due to high prices.
"We expected Indonesia to start importing sugar in January, but now we're not sure as rumours spread that the import could be delayed after the New York rallies," the Thai trader said. Indonesia has imported 450,000 tonnes of white sugar this year. Its mills also import raw sugar to process into white sugar. It has imported more than 280,000 tonnes of raw sugar this year.