Thailand to issue 2021-22 new crop sugar tender 5 months early amid high global prices

Singapore — Thailand's Cane and Sugar Corporation or TCSC will issue the country's first 2021-22 Quota B sugar tender on March 2, around five months earlier than in previous seasons, due to prevailing high global prices and a forecast surge in sugarcane production, trade sources said Feb. 26.

The first new crop sugar tenders of the previous two seasons were issued in the first week of August.

Around 48,000 mt of Thai HiPol raw sugar for March-May 15 shipment will kickstart the first tender for the new crop raw sugar, the trade sources said.

TCSC's Thai Quota B tenders cover 400,000 mt of raw sugar contracts for a season, and typically attract bids from several trading houses. TCSC has overall responsibility for pricing and selling raw sugar under the quota.

"It is very early [for the tender]. The futures price is good and millers might want to start pricing," a Thai producer source told S&P Global Platts.

International sugar prices have turned bullish amid recent signs of global recent macroeconomic recovery from the pandemic, rising crude oil prices and fund buying.

The New York No. 11 March 2022 sugar futures contract has surpassed 16 cents in February and touched a year-to-date high of 16.21 cents on Feb. 22, rising by almost 42% from the lowest point in 2020.

This has spurred Thai sugar producers to seize the opportunity to start pricing in sugar for March-May 15 loading cargoes.

"The Thai production cost is much lower than the [current] futures prices and we are expecting a bigger crop. The huge inverse on March and May 2022 [futures spread] will also encourage Thais to price," a Hong Kong based trader said.

Thailand is expected to see an increase in sugar production for the 2021-22 marketing season (October-September), with industry sources estimating sugarcane production to rise around 40% year on year to 90 million-95 million mt.

Platts Analytics is pegging Thai sugarcane output for 2021-22 at 90 million mt, with the possibility of further upside.