Thailand’s slower sugar canecrushing pace to reduce spotsupply, support premiums in Q1

26-Jan-2021 Intellasia | SPGlobal | 6:52 AM Print This Post

The slower pace at which Thailand has been crushing sugar since the start of the October 2020-September 2021 season is expected to reduce the supply of available sugar in the first quarter of 2021, which would be supportive of Thai cash premiums for the prompt shipment month.

“Cane delivered to millers is still very low and some [millers] are concerned about the total production, so they have stopped offering sugar to trade houses,” a Thai-based trader told S&P Global Platts.

According to crushing reports seen by Platts, as of January 14, Thailand crushed a total 21.57 million mt of sugar since the start of the 2020/2021 crushing season, 42 percent lower compared with the same period last year.

The daily average cane crush volume in the current season was also 27 percent lower from the previous year at 599,180 mt/day.

Based on market expectations that Thailand’s total cane volume for 2020/2021 will hit 70 million mt, this means that the country has already completed almost 31 percent of its crushing operations for this season.

According to market sources, the crushing pace had improved compared with the end of last year, as all of the mills had finally begun crushing operations since the start of January.

“More than ten mills in central and northern Thailand were concerned about cane production so they wanted to delay crushing [operations] until early January, but now all of them have come online,” a Thai-based trader said.

Another factor for the slower pace of crush was due to government regulation, which required sugar millers to procure at least 80 percent of the fresh sugar cane from farmers in the 2020/2021 marketing season, Platts reported earlier.

THAI CANE PREMIUMS LIKELY SUPPORTED

S&P Global Platts assessed Thai HiPol raw sugar for February loading cargoes at 178 points premium to the New York No. 11 March futures on January 22, compared with 162 points over the March futures for March-May 15 shipment cargoes.

Physical trading activity for Thai sugar is thin as Thai producers had withhold their offers to gain clarity on the cash crush situation before making the decision to sell, sources said.

https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/012521-thailands-slower-sugar-canecrushing-pace-to-reduce-spotsupply-support-premiums-in-q1

 

Category: Thailand

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