August 27, 2020
S&P Global Platts | https://bit.ly/350n7np
Singapore — The second Thai Quota B raw sugar tender for the 2020-21 season (October-September) for 48,000 mt of HiPols for March 1-May 15 shipment was not awarded on Aug. 27 because the bids submitted were too low, traders said.
According to the tender results seen by S&P Global Platts, the highest bid submitted was 181 points over the New York No. 11 March futures contract. Three other trade houses submitted bids at 170-175 points over New York. The average premium of the 13 bids from trade houses was 157 points.
The Quota B tender, which covers 400,000 mt of raw sugar contracts for a season is issued by several trading houses and sold on behalf of the Thai Cane and Sugar Corp, which has overall responsibility for pricing and selling raw sugar under this quota.
Half of the amount is allocated to international sugar brokers and the other half to local millers for export.
Brazilian sugar likely to compete with Thai in H1 2021
The first Quota B tender for 12,000 mt of HiPols for March 1- May 15 shipment was awarded to Sucden at premium of 220 points to New York March.
Traders said Brazilian raw sugar entering Indonesia in the first half of 2021 should be on a par with Thai at 170-180 points FOB Thai equivalent over New York March, after accounting for freight and the tax differential.
"Indonesian refineries now have the flexibility to choose the cheapest cargoes because traders are selling them 'omnibus' origins. Previously, these refineries mostly bought Thai sugar," a Singapore-based trader said.
With the small Thai crop this season driving cash premiums to unattractive levels, Indonesian buyers have switched to more competitively priced Indian and Brazilian raw sugar.
According to a shipment report, Indonesia imported 404,947 mt of bulk raw sugar from India over Jan. 1-Aug. 6.
While the cost of raw sugar is one factor, another trader added that any delay in the issuance of import licenses by Indonesia could impede its ability to buy Brazilian sugar due to a longer voyage time from Brazil to Indonesia than from Thailand.
Thai prices are being driven higher by expectations of lower production because of two seasons of extremely dry weather. Platts Analytics expects the 2020-21 Thai cane crush to fall 6.7% on the year to 70 million mt and sugar production to be down 7.1% at 7.7 million mt.