By Supunnabul Suwannakij and Sungwoo Park

July 1 (Bloomberg) — Thai sugar premiums over benchmark grades in New York and London may extend a rally as the government plans to buy back the commodity from traders to meet rising local consumption, an industry group said.

“Thai premiums of both raw and white sugar are likely to rise further” as one more buyer steps in amid tight supply, Vibul Panitvong, executive chairman of Thai Sugar Millers Corp., a group of 46 millers, said in an interview yesterday. “There is nearly no supply available. Most sugar has been committed.”

Thailand, the second largest exporter, plans to repurchase 100,000 metric tons from traders to meet rising domestic demand, Prasert Tapaneeyangkul, secretary-general of the Office of the Cane and Sugar Board, said yesterday. The nation’s output may decline as much as 13 percent in the next crop year as delayed rain and subsequent floods will likely damage cane crops, the board said June 25.

“We target to buy back Thai-origin sugar which has been sold but not yet delivered,” Prasert said. As much as 800,000 tons hasn’t been shipped and “at the moment, there’s no need to import from other destinations,” he said.

The Thai raw sugar cash premium over the New York contract is at about 4.5 cent to 5 cents a pound, Vibul said. It reached a record of 6 cents a pound in May. The Thai white sugar premium is at a record $110 a ton over the London contract, he added.

The raw premium was about 0.3 to 0.5 cents a pound when the futures climbed to a 29-year high of 30.4 cents on Feb. 1. The white premium was about $5 to $10 a ton when prices touched a peak of $759 on Jan. 21, Piromsak Sasunee, chief executive of the top exporter, Thai Sugar Trading Corp., said June 25.

Exports to Drop

Thailand will increase the amount of domestic sugar output set aside for consumption by 4.5 percent to 2.3 million tons to ease tight supplies, Prasert said June 25. Falling output and rising demand will further pare exports in 2011 to below the 4.6 million tons expected for this year, he said.

Raw-sugar prices have tumbled 50 percent from the Feb. 1 peak as hedge-and index-fund managers cut holdings and on signs that production from Brazil and India, the top producers, will improve. The most-active contract more than doubled last year.

Futures for October delivery gained 5.1 percent to 16.06 cents a pound in New York yesterday. White sugar climbed 2.5 percent to $469.30 a ton on the Liffe exchange in London.

July 1 (Bloomberg) — Sugar prices may rise 30 percent this year on increasing demand, low yields and transportation delays for sugar-cane crops in Brazil, said Copersucar SA, a Brazilian cooperative that sells more sugar overseas than Thailand.

“We check fields and weather maps every day, and they tell me prices are rising,” Paulo Roberto de Souza, chief executive officer for Sao Paulo-based Copersucar SA, said yesterday in a telephone interview from Sao Paulo. He said prices could climb to as much as 21 cents a pound this year.

Spot-market demand is measured by longer shipping times in the port of Santos, Brazil, Souza said. He said as traffic increased a ship must wait about a month to load sugar, while normally it would take a week or two. In June, Brazil exported 2.5 million metric tons of sugar, a 12 percent rise over the year-earlier period, the Brazilian Trade Ministry said today.

The availability of sugar in the spot market is tight and should stay this way for some time because of the bottlenecks in Brazil, Michael McDougal, a senior vice president at brokerage Newedge USA in New York, said today in a telephone interview.

Lower Forecast

Sugar-cane output in Brazil’s Center-South, the world’s largest producing region, may be lower than previously estimated on dry weather, industry association Unica said June 21. Unica said March 31 the region will produce 595.9 million metric tons of cane this year, up from 541.5 million tons in 2009. Unica plans to release a revised forecast in the next few months.

Raw sugar for October delivery rose 0.22 cent, or 1.4 percent, to 16.28 cents a pound on ICE Futures U.S. in New York. Prices have slumped 40 percent this year.

Copersucar is a sugar and ethanol cooperative with 39 associate mills. It plants an area of 900,000 hectare (2.2 million acres), more than twice the size of Rhode Island.

Copersucar plans to export 6 million metric tons of sugar next year. Thailand, the world’s second-biggest exporter after Brazil, exported 5.2 million tons last year.

Last Updated: July 1, 2010 17:38 EDT

By Debarati Roy

July 1 (Bloomberg) — Sugar prices may surge 18 percent by the end of this month after hitting a “double bottom” in May and June, said Spencer Patton, the founder and chief investment officer of Steel Vine Investments LLC.

Raw sugar may climb to 19 cents a pound by the end of July after falling below 14 cents on May 7 and June 2, Patton said. A double bottom is a chart pattern showing a drop in price, followed by a rebound and then another decline to the same level, usually indicating support.

“The market was oversold,” Patton said. “The chart points to the market rising higher this month.”

Sugar plunged 57 percent to 13 cents on May 7 from a 29- year high of 30.4 cents on Feb. 1. Buyers delayed purchases on speculation that higher output in Brazil and India, the world’s biggest producers, will erase a supply deficit and drive costs down.

Yesterday, raw sugar for October delivery jumped 0.78 cent, or 5.1 percent, to 16.06 cents a pound on ICE Futures U.S. in New York. The most-active contract climbed 13 percent in June.

“We are gradually seeing buyers return as end-customers see value at these prices,” Patton said.

In 2009, Patton opened Chicago-based Steel Vine, which invests mostly in commodities and equities. He previously worked for KPAC Solutions, a private equity firm.

In technical analysis, traders study charts of price patterns in order to forecast market changes.

Last Updated: July 1, 2010 00:01 EDT

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