Thread: Asia Sugar-Thailand fears defaults, Indonesia faces surplus

Asia Sugar-Thailand fears defaults, Indonesia faces surplus

SINGAPORE, Oct 24 (Reuters) - Fears that buyers will default on sugarshipments are worrying sellers in Thailand, Asia's largest exporter, while thearrival of more raws is causing stocks to pile up in neighbouring Indonesia.

Premiums for Thai sugar slipped to 120 points over New York futures from 135last week in thin trade, on fears a tumbling U.S. sugar market and the globalliquidity crisis could force buyers to delay or cancel purchases, dealers saidon Friday. "We see there have been some problems with payment at this moment. Somebuyers are struggling with financial problems," said a dealer in Bangkok.

New York's March raw sugar contract fell 0.12 cent to end at 10.84 cents perlb on Thursday, the lowest close for a spot month since mid-June, on worriesover a looming global recession. The contract has dropped more than 20 percent so far this month. Though there have been no defaults on sugar shipments so far, many exportersare nervous. Already, buyers are delaying rubber and rice purchases from otherThai sellers after a drop in prices in the international markets.

Thailand exports sugar to Indonesia, Japan, Taiwan, the Middle East and Europe. "One of my Russian customers told me they can't get financial support from their bank. The global financial crisis already has its impact," said another Bangkok dealer.

Soft commodities have been hit by fund selling on worries a global recessioncould cut demand for coffee, cocoa, sugar and rubber. London's December white sugar fell $4.00 to end at $309.60 a tonne onThursday, its weakest since late 2007.

While fears of defaults gripped Thailand, refined sugar stocks held byIndonesia's state plantations and trading houses reached 300,000 tonnes as of Oct. 10, which is 10 times higher than the amount recorded at the same periodl ast year. At least 50,000 tonnes of raw sugar from Australia were being unloaded in West Java this week, from the 1.41 million tonnes of raw sugar already contracted for import in 2008. About 1 million tonnes of raw sugar have already arrived in Indonesia. "The cargo is being unloaded in Cigading port. I guess stocks in Indonesiaare more than enough. Traders have plenty of sugar but it's difficult to selli t," said a dealer in Jakarta.

Due to the ample supplies, farmers have been forced to cut sugar prices to 4,800 rupiah a kg ($0.48) due to ample supplies. It was below government-set farmgate price, or the price paid to farmers, at 5,000 rupiah a kg. "The fall in prices is related to the ongoing increases in sugar stocks heldby producers," said Agus Pakpahan, a deputy minister of the enterprise ministry.

Indonesia's sugar stocks were estimated at more than 1 million tonnes,enough for five months of consumption, as the crushing season progressed in themain producing islands of Java and Sumatra.

In Australia, the sugar cane harvest is now more than 78 percent complete,and dealers said they expected a falling Australian dollar to help offset declines in global sugar prices. "While sugar has been caught up in the market flux - facing extraordinarydaily price movements, the Australian dollar downturn has helped mitigate the effect of these violent movements," said Canegrowers chief executive Ian Ballantyne. "The sugar price retreat has been offset to some degree, but by no meanstotally, by the weakening Aussie dollar."

Australia sugar production is forecast at 4.9 million tonnes in 2008/09,down slightly from the previous year due to dry weather, said the U.S.agricultural attache in Canberra in a report this month.

($1=10,005rupiah)

(With reporting by Bruce Hextall in Sydney, Yayat Supriatna in Jakartaand Apornrath Phoonphongphiphat in Bangkok, ($1=9,950 rupiah) (Editing by Ben Tan)

orange.advfn.com

I was looking at this eariler and I just can't understand why Thailand does not produce a decent dark rum along the Caribbean style.

Something like Woods Navy Rum would sell much better than Sangsom or Hong Thong