By Abhishek Subrahmanya: Subscribe to Abhishek's RSS feed
July 13, 2010 10:39 AM EDT
Thailand, the second biggest sugar exporter, on Tuesday floated a tender to buy back sugar from the global makert to meet increasing domestic demand.
This year Thailand has set aside 2.2 million tonnes for its domestic market but now with the domestic requirement of at least 100,000 tonnes in addition, the allocation was set at 2.3 million tonnes.
The 100,000-tonne tender has driven world sugar prices and triggered concerns over the demand, creating a possible shortfall of the product.
Moreover, the bleak Thai sugar inventory for sale in the second half of 2010 has forced traditional buyers such as Indonesia, Pakistan and the Middle East to find other suppliers.
Thailand is expected to produce around 6.9 million tonnes of sugar in 2010-11, not much different from the previous crop of 6.8 million.
Though India and Brazil cane crop prospects look good, it may not meet the global demand, as the global sugar stocks have run to their lowest levels in two decades.
Meanwhile, the price of New York raw sugar futures for October delivery has climbed more than 10 percent since plans for the Thai tender were reported last week. It neared a four-month high, rising 3 percent on Monday, on buoyant demand.
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The premium on Thai white sugar has jumped to $125 per tonne over London white futures prices, up from last week's $110.
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