Thai exporters offered Thai 100 ICUMSA white sugar, considered consumer grade, steady from a week earlier at $35 over London prices for January-March shipment on Monday. "Most exporters are not lowering their offers. They are not under pressure to sell at all," said one trader.
"They are not even in a hurry to sell. They expect a smaller crop and strong demand from importers like Indonesia."
Traders expect Thai cane output to fall to 40-43 million tonnes from 47 million tonnes in the previous year due to drought.
Indonesia, Southeast Asia's top sugar buyer, plans a tender to buy 190,000 tonnes of white sugar on November 15 for delivery between mid-December and March. The Indonesian government has issued import permits for its state firms to import all 300,000 tonnes of sugar under its 2006 quota so far.
Thailand is Asia's largest exporter of raw sugar. Its key buyers include Japan, South Korea, Taiwan, Indonesia and Malaysia.
In 2005, Indonesia bought mostly Thai sugar in a 500,000-tonne quota.
The harvest of the new crop is expected to start in December, a few weeks later than usual due to rain.
That would delay exports until late December because new supply would not arrive onto the market until then, traders said.
Traders expect little trade impact given that most exporters have sold only for shipment from January onward.
Officials said farmers may switch to grow tapioca if the government did not provide good enough incentives for cane.
"Cane farmers said they will shift to growing tapioca if the government does not give in to their prices request," said Boonthin Kotesiri of the Thai Cane and Sugar Board.
Farmers, citing rising production costs due to high oil prices, want the preliminary cane price for the new crop to be set at 850 baht per tonne.
The preliminary price, usually set before the November-April harvest and based on the world price, is the price that mills must pay farmers at the beginning of the harvest and crushing season.
Officials say the preliminary price is likely to be set at 740 baht per tonne, 120 baht higher than for the previous crop.
Farmers are due to meet with Industry Ministry officials to discuss the price on Tuesday.
The Thai Cane and Sugar Board is due to hold its meeting to decide the price on Thursday before submitting it to the cabinet for approval, officials said.
Farmers would earn some 5,000 baht ($123) more from growing one hectare of tapioca than growing cane at the current domestic tapioca price, officials said.
It takes only six to eight months to grow tapioca and as long as 14 months for sugarcane.
"It is also much easier to grow tapioca given that it requires less attention and is more tolerant of drought," Boonthin said.
The tapioca price has risen 50 percent over the last year, from 1.0 baht per kg to 1.50 baht, fuelled by demand from China and high domestic demand for ethanol.
Thailand is the world's top producer and exporter of tapioca.