In Commodity News 06/05/2015
The focus in the Thai sugar market was on the weather outlook and the implications for the 2015/16 crop year, sources said, with the cane crushing process for 2014/15 complete and as the rainy season draws closer.
Last week, the market was very much focused on the ICE May sugar futures expiry Thursday, which saw Asian agribusiness Wilmar buy a record 1.9 million mt of raw sugar against the contract.
That consisted of 37,611 lots, worth close to $550 million in cash terms.
In the past month, consistent hot weather has also coincided with the end of the crushing season, which market sources said will be complete by this weekend at the latest, by when 106 million mt of cane was expected to have been crushed.
Planting for 2015/16 has started and was expected to be complete by the end of the June, during which month the annual rainy season will start.
“The weather will impact planting and the next crop year, which we are monitoring right now,” one Thai sugar trader said.
“It has been very hot at the top of the country and [that] is something people are keeping their eyes on…Rainy season starts in June, and the weather is changing fast. We are in a period of monitoring,” he said.
A Thailand-based sugar broker echoed that sentiment, saying the rainy season, if vibrant, could result in a “bumper crop” for the 2015/16 season.
“We must wait for rainy season to start. Even though it has been very hot in parts of the country, it has not been dry this year. It is too early to tell what will happen before rainy season,” he told Platts.
HOT WEATHER TO CONTINUE
While northern and central Thailand have consistently seen temperatures close to 40 degrees Celsius over the past fortnight, there has been little concern about the possibility of a drought after dry conditions seen early April were alleviated by storms that brought heavy rainfall and wind.
The Thai Meteorological Department said that in the week to Monday, May 11, heat will continue to cover upper Thailand, which will be “hot…[to] very hot”. Southeasterly winds will also prevail in the northeast, lower central, east, and southern regions, where thundershowers and wind are are also likely.
CustomWeather forecast that in the week to May 11, temperatures in Kanchanaburi, northern Thailand, will remain between 37-39 C, during which conditions will be dry. Storms were not forecast before May 15, when temperatures will rise further.
The conditions were reflected in the central region at a maximum 38-39 C C in Nakhon Sawan, where storms were only forecast for Saturday. From the following week, temperatures were forecast to rise and remain at 39-41 C.
Further east, temperatures will be continue to be a touch cooler in the Nakhon Ratchasima region, holding as a high of 35-37 C through the next seven days, with storms consistent throughout. The forecast was almost identical in Khon Kaen.
