Brazil Raw Sugar Trades at Discount as Surplus Approaches
Buyers of raw sugar from Brazil, the world’s largest producer, are getting a discount for the sweetener loading from August at ports in the country’s main growing region as a forecast surplus approaches.
Raw sugar for loading at ports in the center south in
August was at a discount of 0.15 cent to 0.2 cent a pound to the
price of the July contract on the ICE Futures U.S. exchange in
New York, according to Swiss Sugar Brokers. The sweetener for
September was at a discount of 0.4 cent a pound, the Rolle,
Switzerland-based broker said in a report dated yesterday.
Rains this month and last delayed harvesting and shipments,
pushing the expected surplus forward. Sugar output in the center
south fell 19 percent to 1.96 million metric tons in the second
half of May, according to industry group Unica. Sugar for July
shipment is trading at a premium of 0.25 cent to 0.4 cent a
pound to the exchange price on limited supplies for immediate
delivery, data from the broker showed.
“The surplus estimation from different trade houses
continues almost unchanged,” Naim Beydoun, a broker at Swiss
Sugar Brokers, said in the report. The surplus will come in the
third quarter, “which has been lending some support to July
cash values,” he said.
The global sugar surplus in 2012-13 will be 8.4 million
tons, up from 7.8 million tons estimated for 2011-12, according
to London-based Czarnikow Group Ltd., which traded sugar in 90
countries last year. Global sugar production will be 1 million
tons higher than previously forecast at 176.8 million tons for
2011-12, according to German researcher F.O. Licht GmbH.
Delivery on ICE
Sugar for August onward is at a discount as traders believe
that the July premium is the result of a short-term tightness,
“and the surplus would be hitting the market in August rain or
no rain, whether we are having a million-ton delivery or not,”
The raw sugar delivery on ICE may be more than 1 million
tons when the July contract expires at the end of the month,
Beydoun said. Two traders are expected to receive the sugar, he
Raw sugar for October delivery rose 0.6 percent to 19.86
cents a pound by 10:36 a.m. in New York.
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