BANGKOK: Thai raw sugar cash premiums dropped across the board Friday, as the cash market corrected to reflect market fundamentals. Thai HiPol spot cargoes were assessed 4 points lower on the day Friday at 60 points over the May (K) New York No.11 futures contract.
Moving to the fundamentals, production in Thailand between the start of the 2017-18 season (October-September) on October 1 and March 15 was 10.8 million mttq, up 22% on the year, according to data from the Office of the Cane and Sugar Board or OCSB.
Thailand is on track to have a record sugar output this year, with the OCSB raising its estimate for the the total cane crush during this season to 120 million mt from 107 million mt earlier in the month.
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Further compounding the issue, Thai sugar exports are lagging. Thai sugar exports during February were 621,756 mt, down 5% on the year as raws exports to Indonesia, the biggest importer of Thai raws, tanked 21% on the year to 169,034 mt, according to data from the Thai Sugar Millers Corporation.
Tightening the bear grip in the market, sugar production in India is expected to hit an all-time high of 29.5 million mttq for the October 2017- September 2018 season, with production in the state of Maharashtra pegged to more than double on the year to 10.1 million from 4.2 million mttq, according to data released by the Indian Sugar Mills Association or ISMA.
Adding pressure to the market, India is expected to turn into a net exporter this season from a net importer last season. Exports from India this season is estimated to be around 1.5 million mt, with ongoing discussions that the government is likely to scrap the 20% export duty.
The bumper crop in Thailand and India is part of a wider trend seen in Pakistan, EU and the Commonwealth of Independent States, all of which are now targeting record production and exports to the world market.
