Physical sugar demand was subdued this week as futures prices remained too high for many buyers despite recent falls and European traders focused on the likely start-up soon of a new refinery in Egypt.
Buoyant sugar futures, trading below 17-month highs on sustained pressure from investment funds and speculators, have put off many cash buyers, but lately futures prices have eased, potentially encouraging offtake. Dealers talked of prompt centre/south Brazilian raw sugar offered at a discount of around 30 points to ICE March futures, suggesting Brazilian producers were keen to sel ICE March raw sugar futures were up 0.05 cent to 12.41 cents a lb on Wednesday afternoon.
"I think the futures market has been singularly inattentive to the physical market," one analyst said. The physical trade turned its attention to a new $140 million, 750,000-tonne-capacity sugar refinery, owned by Saudi Arabia's Savola Group, which is expected to start up in Egypt next month.
Kamal Shukri, general manager, international trade and export, of United Sugar, a unit of Savola, told Reuters earlier this month that the refinery, a joint venture of companies including Tate and Lyle, was likely to start producing at 25 percent capacity. Traders and brokers were divided over whether the Egyptian refinery would buy Indian or Brazilian raw sugar.