White Sugar Premium May Extend Gains This Month, Czarnikow Says

(Businessweek) – Feb. 1 (Bloomberg) — The premium for white sugar over raw sweetener will extend gains before March futures in London expire on limited supplies for delivery from Thailand, India and the European Union, C. Czarnikow Sugar Futures Ltd. said.

White sugar for March delivery was $107.42 a metric ton more than raw sugar for delivery in the same month at 1:49 p.m. in London, data on Bloomberg show. It’s jumped 22 percent this year alone and is above the five-year average of $98.

“Thai mills are focusing more on producing raws this season, the Indian white sugar cannot be delivered due to its quality specification and EU sugar is technically un-deliverable against the exchange,” Peter de Klerk, an analyst at London- based Czarnikow, said by phone from London today. “We may see the white premium get stronger before the March expiry.”

White sugar for March delivery was at $626.60 a ton on NYSE Liffe in London and raw sugar for March delivery was 23.55 cents a pound on ICE Futures U.S. in New York. The white sugar contract expires Feb. 14.

Sugar millers in Thailand, the world’s second-largest exporter, have directed less than 29 percent of the first 40 million tons of sugar cane crushed through Jan. 23 to production of white sugar, de Klerk said. That compares to a third of the cane a year earlier, he said. The sugar cane harvest in Thailand usually starts in November. The crops in the EU and in India start being harvested in October.

–Editors: Claudia Carpenter, Nicholas Larkin

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.

By Isis Almeida