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Thai July break-bulk white sugar liquidity builds ahead of expiry

https://www.chemnet.com   Jul 07,2015 Platts
Liquidity in the Thai Breakbulk white sugar market built in the past week as attention switched from raw to white sugar ahead of the ICE August (Q) London 5 futures expiry on July 16, market sources told Platts.

Platts assessed Thai break-bulk 45ic white sugar for July (N) shipment $2 lower on week at a $1 discount to the ICE August London 5 white sugar futures contract on July 2. The futures contract was up $12.60 to $372.60/mt through the same period. There was no assessment on Friday due to a US public holiday.

Interest on behalf of both buyers and sellers increased considerably for break-bulk, with one party heard bidding as low as a Q-$10 early last week, while sellers were not willing to stray far from Q flat.

Market sources said the $10 discount was not a true reflection of the market, but instead reflected one party testing the market after a cargo struggled to berth at a Bangkok port. Having been unsuccessful, the party ramped the bid up to a Q-$8, before abandoning the position when sellers refused to budge.

Fresh interest came into the market when separate buyers lodged bids at Q-$4 and then Q-$3, tempting sellers to lower offers to Q-$1. Platts heard this triggered a trade for a 6,000-12,000 mt cargo for July/August shipment at Q-$2 on Friday.

Sources are anticipating an active tape for Thai break-bulk on July 16 ahead of August expiry. By Monday, open interest in the London 5 market was around 21,000 lots or 1.05 million mt of white sugar, market sources said, seen dropping by around 2,000 lots each day.

One source said a large percentage of this interest is Thai white sugar, and further deals are likely to be done flat against August futures. This was partly a result of elimination, with whites taken from Central America and Brazil considered highly unlikely at this stage of the year.

Platts' assessment of 45ic white sugar in Containers 45ic for July shipment was last assessed at Q+$9 Thursday, maintaining a $10 spread between the two white sugar markets.

The expiry of the ICE New York 11 July raw sugar futures contract last week was largely to blame for the shift in liquidity from raw sugar to whites.

Asian agribusiness Wilmar bought 460,930 mt of raw sugar against the futures contract ahead of expiry Tuesday, consisting of 9,073 lots, with three trade houses the deliverers.

Under three separate contracts, ICE details showed 2,136 and 3,000 lots will be delivered from Paranagua and 3,937 lots from Santos. On the receivers' end, 5,136 lots will be received in Paranagua and 3,937 lots in Santos.

Platts assessed Thai HiPol raw sugar at an 11-point premium to the July New York 11 futures contract ahead of expiry by 16:30 London time last Tuesday, which closed at 12.20 cents/lb.

After rolling forward to October (V), the futures closed at 12.55 cents/lb last Thursday, with the adjusted Thai physical premium adjusted to V-11 points. The latest interest heard by Platts was for July/September shipment, bid at V-22 and offered flat against V.

Platts Thai J-Spec sugar assessment for July shipment has been much more stable in recent weeks. It closed at N+66 points at expiry, adjusted to V+44 points after expiry.

The latest interest on the bid side was heard at V+55 points against sellers at V+75 points Thursday, both for shipment in the October/December window.
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