Thailand has lowered the minimum ICUMSA level of sugar that is being produced as trade sources shared that such a policy move would improve the country's export competitiveness in the long run.
It is reported by S&PGlobal Platts.
The minimum ICUMSA for Thai HiPol raw sugar is reduced from a minimum of 1,000 to 600, according to the report issued by Thailand's Office of the Cane and Sugar Board.
According to the report, white sugar grade 3's ICUMSA level will also be reduced to 400-600 from 400-1,000 ICUMSA.
The International Commission for Uniform Methods of Sugar Analysis, or ICUMSA, is an international standard used to measure the sugar purity and quality based on its color.
The grading scale measures the yellowness of the sugar, with a lower ICUMSA reflecting a lower level of color and pigmentation.
«I believe this move will allow Thai millers to produce better quality sugar to compete with other origins at destination, especially Indonesia. I guess the Thais are trying to catch up with Indian quality, so competition is good», — a Hong Kong-based source sugar trader said.
In early 2020, the Indonesian government had reduced the minimum ICUMSA for its raw sugar imports to 600, from 1,200.
Traditionally, Indonesia had been a major importer of Thai raw sugar, accounting for almost 70% of the country's buying requirement. However, the change in policy had encouraged better quality raw sugar from various origins, including Brazil and India, into Indonesia.
Typically, Brazilian and Indian raw sugar have a ICUMSA level ranging between 600-1,200.
While the OCSB official report states that the policy would take effect immediately, market sources said there is "nothing Thai sugar millers can do for this year" as most of the sugar has already been produced in the current marketing season. Traders believe that the policy would only have an impact on next season's exports.
Thailand is expecting to see an improvement in sugar cane production in the 2021-22 marketing season, after going through two years of dry weather conditions that has dampened sugar production and exports significantly.
Industry sources are currently estimating 2021-22 cane crop output at between 80 million mt and 95 million tonnes, up from the current season at 66 million tonnes.
«I think Thai mills need to be aware of better quality to compete with other origins», — a Thai-based sugar trader said.