Platts Thai HiPol sugar for November shipment was assessed at a discount of 39 points (0.39 c/lb) to the front-month March (H) Sugar No. 11 Futures contract Friday, up 3 points week on week, with sellers in no rush to trade as a more lucrative option lingers on the horizon.
Platts heard offers for HiPol ranging from H-20 points last week to H-40 points Friday for November shipment, with no deals done.
One trader said: "Sellers are all over the place," and will continue to be so as they would prefer to roll the sugar forward to the January 1-March 15 window.
During this time old and new crop can be mixed, earning sellers a greater profit margin. The quality and price on offer is not attractive to the buys side either.
Further forward, an inverted futures market continues to turn the tables on the market heading into next year, as the March 1-May 15 shipment remains an even more attractive window to trade volume than those more expensive further forward.
A trader said it was unlikely the market would see a repeat of volume being held in warehouses until the end of the year as seen in 2015, as traders have evidently been more active in arranging the shipment of significant volume in the first shipment window of the year.
Platts assessed that window 10 points lower on the week at a H+39 point premium. A bid was last heard at H+35 against an offer at H+42.
Meanwhile, Platts May 1-July 15 window headed in the opposite direction, rising 2 points week on week to a 66 point premium to May (K) futures. Buyers were heard at K+55, against sellers at K+80.
At the far end of the curve, the July 1-September 15 window staged an even more aggressive move, closing 10 points higher week on week at a 76 point premium.
Traders said this is largely a reflection of the aforementioned trade being done in the earlier windows, signifying little volume will be available to the market at the end of next year.
Touching briefly on fundamentals, market sources said a wealth of stock being held back for shipment in January 1-March 15 means the market is unconcerned by an expected two-week delay to the Thai crushing season, which will ultimately set back the final availability of the crop.
Crushing would typically start in Thailand around November 15, but expectations are now that December 1 is a more realistic proposition. A trader said any shortage through that two-week period will be sufficiently covered by warehouse stock at that time.
One reason for the delay was a result of wet weather in the central cane-growing region of the country. But to date, dry weather and its impact on final crop production has been much more of a concern for the market than the impact of rainfall.
The rainy season is coming to an end in Thailand, during which dry weather largely prevailed.
In Nakhon Sawan only 23 millimeters of rain fell throughout the past week, and in Kanchanaburi only 3 mm. On a cumulative basis, during May-October total rainfall is still well below historical levels.
