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Asia Sugar-Prices seen firmer as demand picks up

TOKYO: Thai raw sugar premiums are expected to strengthen in coming months on seasonally high demand from regular buyers such as Japan, and hopes for China to start sugar imports, traders said.

"In the market now nobody is offering Thai raws for forward-month shipment, because operators are concerned about the possibility China will start importing sugar to cover a domestic supply deficit," said a Japanese trade house trader.

"The market mood has changed. Earlier this month nobody was interested in buying Thai raw at a 20-point premium. Now at the same level nobody can buy it," he added.

Thai raw sugar premiums for May-July and July-September shipment were bid on Friday at 25 points a pound over New York's Coffee, Sugar and Cocoa Exchange (CSCE), without offers.

Premiums for prompt shipment were offered at 35 points a pound over the New York market, without bids.

Traders here expected China's 1999/00 sugar production to fall to around 7.6 million tonnes, against projected consumption of 9.0 million tonnes. The Chinese government is believed to have large buffer stocks to fill the gap, but that does not rule out the possibility China may step into the market to buy foreign supplies later this year, traders said.

JAPAN BUYING TO PICK UP

Japanese purchases of imported raw sugar seasonally pick up in the April-June quarter. That's because supplies from new cane and beet crops produced by domestic farmers dwindle, while demand from local soft drink makers picks up ahead of their high, summer sales season, traders said.

Japan's Agriculture Ministry said on Wednesday that Japanese demand for centrifugal sugar is expected to rise to 577,700 tonnes on a refined basis in the April-June quarter, from 496,900 tonnes in the January-March quarter.

The ministry also projected Japan's sugar imports in the April-June quarter at 365,300 tonnes on a refined basis, up from 241,900 tonnes in the previous quarter. Domestic supplies are seen falling to 95,400 tonnes from 461,700 tonnes.

"Thailand will be the dominant sugar supplier to Japan from the middle of April, when supplies from domestic crops almost dry up. It will continue to be so until new crop supplies from the Southern Hemisphere producers become available (in the July-September quarter)," said a trader at a different Japanese trade house.

SUPPLY OF THAI RAW NOT AS LARGE AS EXPECTED

Some traders said Thai raw sugar exports for the current marketing year started last November would not be as large as earlier expected, because of Thai marketing strategy this year which focuses more on exports of white and high-polarisation raws rather than raw sugar.

"Earlier this year, there was a talk that Thai raw sugar exports would reach 3.0 million tonnes this season, up sharply from 2.6 million tonnes last season. But it seems fundamentals are not as bad as earlier concerned," the first trader said.

Considering large sales of high-polarisation Thai raws to Indonesia, which is estimated at 400,000-500,000 tonnes in the past three months, as well as active buying of Thai white by countries such as Indonesia and Pakistan, Thai raw sugar exports will likely be around 2.0 million tonnes this season, he added. Demand for Thai raw is projected at 1.5 million tonnes, most of which are from Japan, South Korea and Malaysia. -Reuters