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Cargill seen as big sugar receiver

Posted by Flora Sawita Labels: Companies, Raw Sugar, Sugar

Cargill is expected to be a big receiver of up to 1 million tonnes of raw sugar at expiry on Wednesday of the ICE spot contract, based on the current value of the front-month spread.

Brokers and dealers said if the front-month premium SB-1=R remains around the present level of 95 points (0.95 cent), the delivered tonnage against the New York exchange would likely stand at the upper end of a 500,000-1 million tonne range.

As of Monday, open interest stood at 40,537 lots, or just over 2 million tonnes.

Jonathan Kingsman, managing director of consultancy Kingsman SA, said he expected Cargill to be sole receiver of between 600,000 tonnes and 1 million tonnes of sugar from a mix of deliverers.

Cargill were unavailable for immediate comment on market talk that they were likely to be the sole receiver on Wednesday.

A senior London-based sugar futures broker said he saw potential delivery of between 600,000 tonnes and 1 million tonnes, depending on spread activity, and that Brazilian sugars would be included in the delivery.

"We would agree that there is going to be a substantial delivery tonnage.

"At present spread values, it could be at the top end of the 500,000 tonne to 1 million tonne range, though receivers may choose to take some of the tonnage through commercial contracts rather than via the exchange."

Cargill has been the major receiver of sizeable deliveries in New York for years.

The exception was last October, when trade sources said they were not the major receiver for the first time in 17 years and the sugar was taken by rival trade house Louis Dreyfus.

Raw sugar deliveries stood at a 5-year low of 20,168 tonnes at expiry of the October contract in 2011.

The biggest raw sugar delivery in 2011 was the March delivery at 965,000 tonnes.

The July raw sugar contract expired in 2009 with 26,783 lots delivered to the tape, or a total of 1.36 million tonnes.

Kingsman said he expected the delivery to include some 300,000 tonnes from the main growing regions, the centre-south and north-east, of top producer Brazil, 150,000 tonnes from Central America and 25,000-50,000 tonnes from the Philippines.

The Philippines, a major producer in the 1970s, started delivering sugar against the ICE expiry again in 2011.

A big question market was how much Thai sugars would feature.

"Thai raws will be the sugars that the main receiver is targeting," said De Klerk.

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Sugar at four-month top, March deliveries loom

Posted by Flora Sawita Labels: Futures Cocoa and Coffee, Futures Sugar, Raw Sugar

Raw sugar futures sprang to a four-month peak on Monday on fund and investor buying as players turned their focus into the upcoming delivery for the spot March contract when it goes off the board on Wednesday.

Coffee was mixed and cocoa was modestly firmer.

New York's March raw sugar contract climbed 0.31 cent to close at 26.50 cents per lb, just below the session peak at 26.69 cents, which is the highest intraday level for the spot contract since October 28, 2011.

London's May white sugar increased $9.70 to conclude at $671.10 per tonne.

"People are rolling out of March and we could see a noticeable drop in open interest," said Country Hedging Inc senior analyst Sterling Smith.

Dealers said the sugar front-month premium indicated potential for a large delivery against expiry of the March ICE raw contract on February 29.

But Smith and other sugar brokers pointed to the fact that ICE Futures US data showed open interest in the previous two sessions in the March raw sugar contract has dropped over 24,000 lots.

Open interest as of Friday stood at 40,537 lots.

"We could drop 30,000 in the next three days so the amount of deliveries remains fluid," a dealer for a brokerage house said.

London-based brokers said the delivery, likely to go to a sole receiver, was expected to stand at between 500,000 and 1 million tonnes.

Brokers said the sugar will probably come from the smaller north-east crop of leading producer Brazil, Thailand and Central America.

Logistical constraints may prune the amount of sugar from Thailand, while Central American sugar exporters could move their sugar to the US and Mexico, where tightly supplied markets could fetch them higher prices.

Smith said sugar is trading at the upper end of its trading range, and other analysts said the overbought market is vulnerable to a setback.

"We're vulnerable to the risk of a correction (down)," said James Kirkup, head of sugar brokerage at ABN Amro Markets.

Market participants kept a close watch on the front-month robusta premium in the London coffee market, which has seen sharp volatility in recent weeks.

The market was focused on the extent of origin selling from top producer Vietnam, with a risk the front-month premium could widen again in the next few weeks, said Andrea Thompson, analyst with CoffeeNetwork, a subsidiary of INTL FCStone.

London's May robusta futures fell $44 to end at $2,012 a tonne.

New York's May arabica rose 1 cent to finish at $2.046 per lb.

Arabica coffee futures on ICE edged up, with upside capped by the firmer dollar.

"The dollar is weighing - there is general commodity selling, with oil going down," Thompson said.

Cocoa futures moved higher, sweeping past a topside barrier to enable New York bean values to trade over $2,400 per tonne.

New York's May cocoa futures added $43, or 1.8 percent, to finish at $2,400 a tonne, down from a session peak at $2,443.

Prices were underpinned by recent tight arrivals of beans in West Africa.

The firmer dollar limited upside potential.

London May cocoa increased 29 pounds, or almost 2 percent, to finish at 1,542 pounds per tonne.

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Indonesia will not import white sugar this year (2012)

Posted by Flora Sawita Labels: Indonesia, Raw Sugar, Sugar Import

Indonesia, Southeast Asia's top sugar consumer, will not import any white sugar this year because it has enough stocks to see it through until its milling season, but has left the door open for raw sugar deliveries, a government official said on Friday.

Last month, the country's agriculture minister said Indonesia had ample white sugar stocks to see it through until milling season, which usually begins in May.

"We have decided that we are not importing white sugar in 2012 since we have 820,000 tonnes of white sugar carryover stock which is enough for four months consumption until April, 2012," Agus Hasanuddin, director of seasonal crop at agriculture ministry, told Reuters.

Indonesia imported 118,129 tonnes of white sugar last year, from total permits for 450,000 tonnes.

Indonesia's government is only allowed the issue of white sugar import permits from January until April.

The country imports 60 percent of its sugar from Thailand, 20 percent from Brazil and 10 percent from Australia, the Indonesian Sugar Association (AGI) says.

If current stocks are not enough to meet demand beyond the milling season, then the government may issue import permits for raw sugar, Hasanuddin added.

The raw sugar will be processed by domestic sugar mills to produce white sugar.

"There may be a possible need to import raw sugar to fulfil one month of white sugar consumption before the new crop enters the market," Hasanuddin said.

Imports of mono-sodium-glutamate (MSG), raw, refined and white sugar into Indonesia were an estimated 3.3 million tonnes in 2011, the Indonesian Sugar Association (AGI) said last year.