Buyers of raw sugar from Brazil, the world’s largest producer of the commodity, are paying a bigger premium for their sweetener on demand from the Middle East and Far East regions, according to Swiss Sugar Brokers.

Raw sugar for loading next month at the port of Santos, Brazil’s biggest, last traded at a premium of 0.15 cent a pound to the price of the March contract on the ICE Futures US exchange in New York, the Rolle, Switzerland-based company said in a report e-mailed yesterday. That compares with a premium of 0.1 cent a pound on Jan. 30, data from the broker showed.

Higher premiums are pointing to “tightness in Brazil supply during their intercrop, and unquestionably coming from regular demand from the Middle East refineries,” said Naim Beydoun, a broker at Swiss Sugar Brokers. Demand is also gaining because of lower futures prices and sales to Far East, he said.

Sugar futures, which fell 39 percent in the past two years, are down 6.5 percent this year as supplies are set to outpace demand by 6.2 million metric tons in the 2012-13 season started in October in most countries, the International Sugar Organization in London estimates.

In Brazil’s center south, the country’s main growing region, harvesting of the 2012-13 crop ended, with sugar production at 34.1 million tons, data from industry group Unica showed. The new crop will start being gathered in April.

Brazilian raw sugar for loading in April was at a premium of about 0.2 cent a pound to the exchange price, up from 0.08 cent on Jan. 30, data from the broker showed. For loading this month, the sweetener was at a discount of 0.05 cent a pound, unchanged from Jan. 30, according to Swiss Sugar Brokers.

Asian Demand

“A combination of strong Asian demand (mostly Indonesia) and port congestion from soy helped Brazilian raws strengthen further,” Tom McNeill, a director at Brisbane, Australia-based researcher Green Pool Commodity Specialists Pty. said in a separate report e-mailed today.

A record soybean crop in Brazil is creating a backlog of ships at the country’s main ports as the harvest begins and corn is still being shipped. As many as 106 ships were waiting at Brazil’s main ports to load soybeans, animal feed or cooking oil on Feb. 8, according to broker and consultancy SA Commodities in Santos, Brazil. A year earlier, 66 were waiting.

In Thailand, premiums also rose, with the sweetener for loading from March to May 15 being quoted at a premium of 0.8 cent to 1 cent a pound over the futures price, Swiss Sugar Brokers data showed. That compares with a premium of 0.65 cent to 0.85 cent a pound on Jan. 30.

Raw sugar for delivery in March rose 0.6 percent to 18.24 cents a pound by 6:25 a.m. in New York. - Bloomberg