White Sugar Premiums May Signal Increased Demand Before Ramadan

Premiums for white, or refined, sugar are rising in India and Europe, possibly signaling increased demand for the sweetener before the Ramadan, according to Swiss Sugar Brokers.

The price of white sugar in India, the world’s second-biggest producer and largest consumer, is $25 a metric ton above the August futures on the NYSE Liffe exchange in London, the broker said in a report e-mailed dated May 12. The premium was $15 a ton on May 5, according to data from the broker.

The premium in the European Union is $40 a ton above NYSE Liffe, up from $35 a ton on May 5, data from the broker show. In Thailand, the world’s second-largest exporter, the premium held is $25 a ton for shipment in bulk and $35 a ton for containers.

The premiums and the price difference between white and raw sugar futures are “firm” and that “could be the front-runner indicator of the pre-Ramadan demand,” Naim Beydoun, a broker at the Rolle, Switzerland-based company, wrote in the report. EU supplies are also limited because the season that started in October is now coming to an end, he added.

Muslim nations usually stock up on sugar before Ramadan, which starts in July this year. White sugar futures trading in London were $109.90 a ton more expensive than the raw sugar contract negotiated in New York by 11:22 a.m. in London, an increase of 23 percent so far this year, data on Bloomberg showed. Thailand may benefit this year from demand before Ramadan because the crop in top global producer Brazil started later than usual.

Raw Sugar Premium

The premium buyers have to pay to obtain raw sugar from Brazil, the world’s biggest producer, also rose this week as traders sought to cover their short positions, or bets on lower prices, according to Swiss Sugar Brokers.

Brazilian sugar for loading at the port of Santos from May 15 to June 15 was 0.2 cent a pound above the July contract on the ICE Futures U.S. exchange in New York, Swiss Sugar Brokers said in the report. That compares with a premium of 0.03 cent to 0.06 cent on May 5.

The increase in premiums may signal “short-term supply is not as ample as expected,” Beydoun said.

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