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Anchalee Koetsawang
Bangkok, Nov 23: Australia's withdrawal from the sugar market due to a crop collapse has provided much-needed relief for the Thai market, industry sources said on Monday.
But the bullish Australian news failed to boost Thai premiums significantly amid slack demand and an influx of sugar from South America, they said.
The sources did not rule out the possibility that Thai premiums might rise substantially in the near term if demand returns or South American sugar is delayed because of infrastructure damage caused by Hurricane Mitch.
"If strong demand emerges in Asia soon and sugar shipments from South America are really delayed..., then Thai premiums will most certainly benefit," said a Hong Kong-based trader.
Australia, whose 1998 sugar crop has been badly damaged by torrential rain, withdrew from the export market six to eight weeks ago, the top executive of Queensland Sugar Corp said on Friday.
Both Thailand and Australia are major sugar suppliers to Asia. Thai premiums edged up slightly this weekbecause of the Australian news.
Traders said they expected the premiums to be supported at current levels for some time.
Thai raw premiums for March/May and May/July firmed lightly to 50/60 points over New York from around 45/60 last week.
Thai raw sugar for January/March was bid at 45 points over New York's Coffee Sugar and Cocoa Exchange (CSCE) without any offer, traders said.
"It's stunning news. But the impact could have been much stronger had it not been because of the sugar influx from South America," said Sukhum Vichienratanapong, deputy general manager at the Thai Cane and Sugar Corp.
"The market also definitely needs more demand to push the price up. There is not much activity at the moment. Australia provided some support on the supply side, we need strong demand side factors," he said.
Traders said the Thai physical market was quiet with Indonesia entering the market for small white sugar purchases.
"Indonesia did enter the market to buy Thai whites for prompt shipment, but only1,000-3,000 tonnes each time," said a trader with one major US trading firm.
"I heard no one there wants to keep big stocks because they were concerned about sugar theft," she said. Sugar crushing for this season (November-May) started last Friday in Thailand.
Thailand's 46 sugar mills will open in stages with the last group to start crushing on December 25, according to an official at the Thai Cane and Sugar Board. But he said millers were reluctant to commit much as they expected premiums to rise.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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