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Thailand expects to export a record 7 million tonnes of sugar in 2011, a senior official said on Friday, though demand from traditional buyers in the Middle East and new Russian and EU markets could help ease pressure from the global surplus.

The 2010/11 crushing season had almost ended and a total 9.62 million tonnes of sugar was likely to be produced, the highest ever, Prasert Tapaneeyangkul, secretary-general of the Office of Cane and Sugar Board (OCSB), told Reuters.

Against that backdrop, the quota to be set aside for the home market had been cut to 2.6 million tonnes from 2.8 million.

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"This means we would have up to 7.0 million tonnes surplus left for export this year," Mr. Prasert said. "Concerns over a possible shortfall on the domestic market have subsided as we have record output this year."

Thailand, the world's second-biggest sugar exporter after Brazil, shipped 5.12 million tonnes in 2009 but only 4.42 million tonnes last year, when authorities bought back sugar from international trading houses for the first time to meet domestic demand. Some 74,350 tonnes were bought back in July 2010.

Mr. Prasert said he expected firm global demand at a time when other major producers such as Brazil and Australia faced disruption to crushing and a fall in supply.

Brazil's centre-south has produced 47 per cent less sugar in the season through mid-May versus a year earlier, but output is catching up with last year's pace, helped by drier weather from mid-April and more mills starting to crush cane from the new season.

Premiums for Thai raw sugar were offered at 200 points, or 2.0 U.S. cents, above New York raw sugar futures - steady since early this month. But buyers mostly bid at 180 points, with eyes on the impact of the vote by the European Union committee on Thursday to open a 200,000 tonne duty-free import quota for raw and white sugar.

The EU also approved a tendering system for future imports at reduced duties. Thailand is expected to be a key supplier to the EU with the vote. The premium on Thai white sugar was steady at $65 above London white futures, but some dealers has seen business done recently at a premium of $55.

Demand from Russia is also likely to rise, as Moscow has switched to buying the sweetener from Thailand after its traditional supplier, Brazil, faced port congestion.

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But Brazil's No. 2 port for sugar exports now expects throughput to climb as much as half and for ships to face shorter waiting times to load in the current harvest. An official said queues would recur at the port this year as it expected to handle even more sugar, though waiting times would be less severe than last year. At least 98,625 tonnes of Thai sugar was shipped to Russia from January to April, nearly five times the 21,200 tonnes sold in the same period last year, and Moscow was expected to take more because of competitive prices.

Traders also expect demand to come from traditional buyers in the Gulf ahead of the fasting month in August.

"The Middle East would be major buyers at this moment as demand there was expected to rise ahead of the holy Muslim fasting month of Ramadan," said a Bangkok-based trader who deals with major buyers in the Middle East and Indonesia.

Apart from Thailand, sugar production elsewhere was rising, traders said.

India, the world's second-biggest producer after Brazil, is likely to produce 24.2 million tonnes in 2010/11, higher than local demand of about 22-23 million. It has approved exports of 253,000 tonnes so far this year, part of planned 500,000 tonnes of overseas sales. The global sugar surplus may exceed 3 million tonnes in 2011/12, up from 0.8 million tonnes in 2010/11, the International Sugar Organization said. "Yes, we see rising supply, but demand is strong, too. As you can see, India can also export gradually, which means there is demand out there," said a Singapore-based trader.

A Bangkok trader agreed: "At this moment, I think demand can absorb a rise in supply and premiums are unlikely to drop as trading houses are still looking to buy more sugar from local millers."

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