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NEW YORK (Reuters) – Three trade houses have scooped up over 1 million tonnes of Brazilian raw sugar against the May futures contract that expired on Monday, with Wilmar International seen selling more than half of it, according to ICE Futures U.S. data and traders.
Many market participants view this as bearish, pointing to weak demand amid abundant global supplies, with traders saying Wilmar became a major seller after being a large buyer of raw sugar deliveries against ICE contracts in recent years.
Wilmar, a Singapore-based trader, did not respond to a request for confirmation.
The ICE May raw sugar delivery totaled 21,021 lots, about 1.07 million tonnes, down from 29,947 lots a year prior, ICE Futures U.S. data showed on Tuesday, confirming a Reuters report. Of this, traders said Wilmar sold 12,909 lots.
July raw sugar futures pared losses after falling by as much as 2 percent to 11.52 cents per lb on Tuesday morning.
“The guess would be that Asia is swimming in sugar right now, what with India and Thailand producing a large amount,” said Michael McDougall, senior vice-president of sales for ED&F Man Capital Markets.
One dealer noted Wilmar delivering against the May contract is a “pretty significant event,” as it signals potentially weaker demand from refineries in Algeria, Morocco, and Indonesia.
“It’s maybe a sign that demand going forward is not as robust … Usually Wilmar would have homes for that sugar in Algeria and Morocco and Indonesia,” the dealer said.
Forecasts for a large global surplus have pressured prices, with the spot raw sugar futures contract falling to a 2-1/2-year low at 10.69 cents per lb last week.
China’s Cofco International [CNCOF.UL] was also a seller in this delivery, of 6,463 lots, traders said. A Cofco spokesman declined to comment.
“As the owner of a couple of major refineries in China, if Cofco themselves are throwing in the towel and delivering, then it gives you signals about the demand for raw sugar from the refineries there,” the dealer said.
Trade house Louis Dreyfus Co [AKIRAU.UL], bought more than half the delivery at 11,998 lots, traders said. A company spokeswoman declined to comment.
An Alvean spokesman confirmed the company, a joint venture of Cargill Inc [CARG.UL] and Brazilian sugarcane cooperative Copersucar, purchased 5,925 lots of the delivery.
Trade house Sucres & Denrees (Sucden) was seen buying 3,098 lots, traders said. The company did not respond to a request to comment.