Thai raw sugar premiums held almost steady this week even as China bought some of the sweetener from Guatemala and trade deals for Brazilian sugar gathered momentum, dealers said. Although there were hardly any major trade in Thai sugar, dealers expect Bangkok to seal more deals in coming weeks.
"China has locked in some deals for sugar from Guatemala but we are yet to hear about any significant trade for Thai sugar in the region," said a dealer by telephone from Singapore. Sugar output from Guatemala, a leading producer in Central America, hovers around 2 million tonnes a year, with nearly half of the sweetener shipped out to a numbers of buyers.
The widely traded high polarisation, or hipol raws, are now being offered at 62 points above the front-month March New York contract for March/May delivery against 60 points from the previous week. On Thursday, March New York raw sugar settled down 0.04 cent, or 0.3 percent, at 14.41 cents a lb. Total open interest rose for the seventh straight day on February 4 to the highest in nearly five months.
Raw sugar prices are unlikely to make any substantial recovery this year even as growers cut production, reducing the excess that has punished prices for the past four years, according to a Reuters poll of 15 analysts and traders. Premium for J-spec, the low-quality Thai raws favoured by Japanese buyers were, was quoted at 55 points above New York's March contract against 50 points last week.
Thai white sugar premiums were at $22 a tonne to London futures, up from $22 last week. March white sugar futures on Thursday closed down 80 cents, or 0.2 percent, at $378.50 per tonne. Separately, India, the world's biggest sugar producer after Brazil, last week raised its output forecast by 4 percent to 26 million tonnes in the year beginning October.
Higher output will exacerbate Indian mills' woes. As India is set to produce surplus sugar for the straight year, falling prices have hit most mills. India's raw sugar exports could halve this year as mills wait for the government to give the go-ahead for an increased production subsidy, traders said, potentially supporting depressed global prices.