The Thai Cane and Sugar Corporation (TCSC) will hold a Quota B tender Wednesday for 54,300 mt of HiPol for shipment in both the March 1 to May 15 and May 1 to July 15 windows, sources said Tuesday.
The result is expected to replicate the previous tender when volume was awarded at a significant premium to the majority of interested buyers.
The 800,000 mt contract for the year, all raw sugar, is held by several trade houses, and is sold on behalf of the state-run TCSC, which has overall responsibility for pricing and selling raw sugar under this quota.
Half of the amount is allocated to international sugar brokers, with the rest going to local millers for export.
This will be the fifth Quota B tender for 2016, and after the previous tenders, one trader said the volume on offer represents what remains available for shipment in the two windows. A separate tender is expected to be held at a later date for any remaining volume for July 1 to September 15 shipment.
The Quota B tender is used as a strong indication of the value of the next crop -- and there were fears that volumes awarded at too high a level could prove detrimental to the wider market negotiating future deals. This is exactly what happened last month.
In the last tender on September 15 -- the fourth of the year -- the winning bidder was awarded the total 60,000 mt of HiPol raw sugar on offer for both March 1 to May 15 and May 1 to July 15 shipment, alongside 24,000 mt for July 1 to September 15, all at 53 points over March, May and July futures, respectively.
But traders had consistently considered a premium close to 40-45 points above any futures contract for next year as the maximum they would be willing to pay in any current and future tender. Aside from the successful bidder on September 15, bidding ranged from 25-45 points above futures.
Expectations for Wednesday are no different. A trader told Platts that the winning bidder was maintaining a long position in the market, and were expected to come back into the next tender, bidding at a considerable premium to the rest of the market.
The trader said most market participants would maintain buying interest at 40-45 points above respective futures contracts, while the awarded volume would again most likely be won at the 55 point level.
Platts Thai HiPol sugar for March/May 15 shipment was assessed at H+48, up 2 points from Friday's close. A trade was heard done Friday at H+48 for 12,000 mt, while a bid was heard at H+45 and an offer at H+50.
HiPol for May/July 15 shipment was assessed at a 56-point premium to May (K) futures, unchanged from Friday's close. Platts heard buying interest at K+50, with no interest on the sell side.
