Sugar premiums seen up; Vietnam weighs on coffee

SINGAPORE (Reuters): Sellers could push up premiums for raw sugar this week to offset losses in New York futures, while a rebound in coffee prices could tempt farmers in Vietnam to offer more beans in the physical market, dealers said on Monday.

For rubber, a decision by the world’s main producing countries to back off from a plan to lift prices weighed rubber futures on Tokyo Commodity Exchange, but supply scarcity could limit the decline.

Softs commodities were likely to be dictated by developments in the global economy because of lingering uncertainties over how euro zone leaders would respond to mounting funding difficulties for European banks.

“Sugar is really low now at below 24 cents level. I think a lot of people are looking for it to go down further,” said Lynette Tan, an analyst with Phillip Futures in Singapore.

“Generally, I think it’s still the macroeconomics weighing on the commodities markets.”

Premiums for Thai high polarisation, or hi-pol, raw sugar for January-March delivery could edge up to near 150 points after being offered at 135 to 140 points to New York’s March contract last week.

Malaysia’s purchase of nearly 3 million tonnes of sugar over a three-year period was more or less confirmed, with the cabinet expected to approve it in the next few weeks.

“Trade houses used to care because everyone wants to sell to Malaysia. But now everybody knows that Malaysia has already bought everything,” said a dealer in Singapore.

“If you are talking about sugar prices, I feel that they are more driven by macroeconomics and technicals currently. “

ICE’s March raw sugar settled down 7 cents, or 0.3 per cent, at 23.97 cents a lb on Friday.

The contract hit a session low of 23.90 cents.

The International Sugar Organisation forecast a global sugar surplus of 4.46 million tonnes in 2011/12, but was not certain that the surplus phase would continue into the next crop year.



Coffee traders eye Vietnam; butter ratio at historic low

Coffee sellers in Vietnam, the world’s largest robusta producer, could offer more coffee this week after heavy rains stopped, allowing farmers to dry their beans.

Farmers and exporters have deliberately held on to their beans, hoping for prices in London to rebound after hitting an 11-month low around $1,780 a tonne earlier this month. Life’s robusta for January settled up $27 to $1,880 a tonne on Friday.

“The London situation is more questionable because a powerful selling pressure from Vietnam could temporarily limit the upward potential,” said SW Commodities in a report.

“But how much of this coffee will effectively be able to be shipped before the end of the year remains unknown.”

In cocoa, cocoa butter ratios were likely to stay at a historic low in Asia, but a pick-up in demand for the first half of next year could prevent prices of the key chocolate ingredient from falling further.



Rubber to hover around 260 yen/kg

Tokyo rubber futures could trade around 260 yen a kg this week with tight supply in Southeast Asia expected to offer support even though Thailand, Indonesia and Malaysia failed to come up with measures to lift physical prices.

The three countries, which account for 70 per cent of global output, said on Saturday they did not see any immediate need for price intervention as they expected the rubber market to pick up soon for seasonal reasons.

Supply is extremely tight in second-largest producer Indonesia because of a prolonged dry season, which helped prices of SIR20 tyre grade surpass Thai RSS3 for the first time in several years.

The three countries have got together in the past to support the market, most recently in December 2008 as physical rubber fell to a seven-year low of $1.10 per kg when global recession loomed.