A few cargoes of Thai high polarisation raw sugar were traded for next year's delivery but soaring premiums for J-spec scared off consumers, while talk about washouts by China stirred up an otherwise slow physical market, dealers said on Tuesday. China, the world's third-largest sugar consumer, had sold back up to 150,000 tonnes of raw sugar it bought from Brazil, dealers said, but there was no independent confirmation. China mainly buys sugar from Cuba, Thailand and South Korea.
"Some say China is washing out 100,000 to 150,000 tonnes but I would think it will be a bit less. Conservatively, it's less than 100,000 tonnes. I think they still need sugar and domestic prices are high," said a dealer in Singapore. "I think it won't make much sense to wash out that much."
Government officials were quoted as saying in April that China's 2010/2011 sugar output is expected to slip to 10.5 million tonnes from 10.74 million tonnes last year, but Beijing has already stocked enough imports to cover any deficit. "China seems to be selling a couple of cargoes. But it's just opportunistic Chinese trading," said a regional dealer, who gave no further details.
Setting China rumours aside, premiums for J-spec Thai raw sugar jumped to as much 500 points above New York's October contract their highest in nine months, reflecting tight supply for the variety favoured by Japanese users. There were no deals for J-spec, but high polarisation, or hipol, Thai raw sugar for shipment in the first half of 2012 was traded at around 80 points above the March contract as consumers gradually shifted to next year's delivery. "A few buyers have missed the chance to buy October cargo, so a few sellers refused to sell their J-spec at lower premiums," said a dealer in Tokyo. "They are certainly asking for high premiums at this moment."
Premiums for hipol prompt shipment were much higher, with bids at 180 points above the October contract and offers at 250 points, hardly changed from last week. Premiums for Thai white sugar edged up to $35 to $45 versus London's August contract, up from $25 last week.
A lack of activity in the nearby market suggested that consumers were waiting for the value to slip, while closely watching for the progress of the crop in top grower Brazil. "The high price is driving the demand away. There isn't much on the buying side. Everyone seems to be waiting," said the dealer in Singapore. "The white market has gone up, but I guess there are no deals at the current levels." Liffe August white sugar futures settled $4.60 or 0.6 percent lower at $765.00 per tonne on Monday. Agricultural markets trading on ICE Futures US resumes on Tuesday after the Independence Day holiday.
WEEKAHEAD The state-run Thai Cane and Sugar Corp (TCSC) will hold a tender to sell 60,000 tonnes of raw sugar from the current 2011/12 crop next week, and dealers will keep an eye on the premiums paid by buyers. The TCSC offers to sell both J-spec raw sugar, a low quality sold mostly to Japan, and a high-quality, or hipol, spec. Thailand, the world's second-biggest exporter after Brazil, allocates 800,000 tonnes of raw sugar each year for the TCSC to sell. Half is sold through tenders to international trading firms and the rest to domestic mills for export.