Singapore: Small quantities of Thai white sugar were sold to Vietnam and China at $550 to $560 a tonne including freight for nearby shipments as London futures sank, dealers said on Wednesday.
There were no signs of buying from India, the world’s largest sugar consumer, despite the falling prices. London futures have tumbled nearly 40% since hitting record at $767 a tonne in January. Thai raw sugar premiums roared to a 16-year high at 300 points after New York futures hit a 9-month low.
“There have been some major problems in recent weeks with possible ‘renegotiations´ of white sugar sales into India,” a dealer in Singapore said.
“However, on the other hand, raw sugar premiums for Thai sugar have gone ballistic. Evidently there is very little physical Thai raw sugar left, and those with any are demanding very steep premiums,” he added.
White sugar broke below $500 on Tuesday, with May ending down $33.80 or 6.7% at $473.70 a tonne after earlier trading at $472, the lowest level for the front month contract since 23 July, 2009, on improving crop in India.
Some dealers had estimated that India contracted to buy around 900,000 tonnes of white sugar in the crop season which began in October last year.
But the country is likely to delay sugar imports until later this year as the farm minister says domestic output may hit 17 million tonnes and top producer Brazil will provide enough sweetener from its crop to lower prices further. [ID:nSGE62H074]
May raws in New York tanked 1.27 cents or 7.1% to finish at 16.57 cents a lb, the weakest settlement for the spot contract since 26 June. It was the biggest one-day fall for sugar since 1 March, when it dropped 7.75%.
Dealers normally push up premiums to compensate for losses in futures prices but the physical market for raws was quiet. There were several deals for white sugar but volumes were low. “The volumes are very small at less than 1,000 tonne. But we are moving along with futures prices now below $500. There are deals being done recently to Vietnam and China,” a dealer in Singapore said.
“We’ve got a lot of inquiries since Monday,” he said.
In early March, Thai white sugar was sold to Indonesia, Vietnam and the Philippines at as high as $700 a tonne, including freight.
Vietnam aims to import 280,000 tonnes of raw and refined sugar this year to keep a lid on domestic prices, while China has stepped up purchases after drought hit cane and rubber growing areas, dealers said.