Thai sugar premium steady amid limited market activity

The Thai 45i container sugar cash premium remained stable this week at $25/mt as ICE London No. 5 May futures consolidated around $520/mt.

Though offer indications in the cash market were mostly unchanged, buyers have been waiting to see if futures lose any more steam before making purchasing decisions. As a result, trading activity in the Thai refined sugar market has mostly been muted.

Asia sugar buyers were also unwilling to take on additional risk coming from the container market and would rather wait for the political tension to ease before taking on any positions. Container rates in Asia has been firm due to equipment shortages and higher bunker fuel costs amid the ongoing war between Russia and Ukraine, sources said. A refined sugar buyer also pointed out that "shipping rules are constantly evolving and affecting the availability of containers in the market".

Thai producers increasing 2023 sales

Similarly, the raw sugar market has been rather quiet, with limited bids and offers seen.

Futures spreads have also been largely flat for the week. A Singapore trader said "the market has been rather illiquid these days and Thai values are holding steady with the lack of trades". The S&P Global Commodity Insights assessment of Thai Hi-Pol spot cash premium for April loading remain unchanged at 168 points over NY May (K) 2022 futures.

While Thai cash for 2021-22 crop has not been seeing much price movement due to slow market activity, there has been robust sale for sugar in the next crop season (2022-23). In the month of March alone, three Quota B tenders have been held by the Thai Cane and Sugar Corporation and sale has reached 30% of the total 2023 volume.

The tenders held on March 1 and March 11 have been awarded to Itochu and Wilmar at a premium of 100 points and 101 points over NY March (H) 2023 contact respectively for March-May 2023 shipment.

For the latest tender held on March 17, Alvean secured the winning bid at NY H23+101 points for 12,000 mt of March-May 2023 shipment sugar while Louis Dreyfus won the tender at NY K23+135 points for 36,000 mt of May-July 2023 shipment according to a tender report seen by S&P Global.

Following these tenders in the market, there has been some bids and offers in the inter-trade for the new 2022-23 crop. However, no trades have been concluded thus far other than those awarded under Quota B.

Market sources are expecting more demand to return as prices start to stabilize and with the Thai cane harvest slowly beginning to wind down. Five mills are already shut for the current season and total crush is projected to reach above 90 million mt.