TOKYO: Thai sugar premiums expanded gains on fresh demand from Pakistan and Vietnam and are likely to rise further as falling futures prices attract buyers, traders said on Thursday.
The premium on Thai high-polarisation raw sugar was offered at 450 points over New York future prices, up from 300 points in late April, they said.
The J-spec, or a low-polarisation, raw was offered steady at around 300 points.
"Falling futures prices lured buyers, especially those who need to import to offset domestic shortfalls like Pakistan and Vietnam," said a Bangkok-based trader.
Benchmark New York raw sugar for July delivery ended at 14.67 cents per lb on Wednesday, down more than 50 percent compared to a 29-year high of 30.40 cents per lb marked in February.
Pakistan is due to open tenders to buy a total 600,000 tonnes of white sugar as domestic production fell short of demand, said officials at the Trading Corporation of Pakistan (TCP).
The country will hold tenders on May 15, May 22 and May 29 to buy 200,000 tonnes of white sugar at each occassion. Pakistan has already bought 200,000 tonnes of white sugar from the UAE-based company, Al-Khaleej, by last week's tender, one TCP senior official said.
Pakistan issued several tenders from December 31 to buy sugar from the international market, after estimating its 2009/10 crop would yield about 3 million tonnes of white sugar, short of annual demand of 4.2 million tonnes.
The TCP has so far contracted to buy 575,000 tonnes of white sugar, out of which more than 50,000 tonnes has already arrived while about 68,000 tonnes more were expected by May 20, another TCP official said.
With rising demand, the premium on Thai white sugar jumped to $95 a tonne over London sugar futures prices, up from last month's $50 a tonne, traders said.
"The premium for both white and raw sugar from Thailand are expected to rise further as there is less sugar at a few international trading houses that bought aggressively from millers since the start of crushing season late last year," a Thai trader said.
Another factor to push Thai white premium sugar higher was fresh demand from Vietnam, which also needs to import more sugar this year to offset supply shortage and Thailand is the most likely choice because of proximity, traders said.
Vietnam on Wednesday said that it may have to double its sugar imports this year to 400,000 tonnes due to lower domestic production and steady rise in demand.