UPDATE 1-Receivers start moving ICE May expiry sugar
* 1.43 million T delivered against ICE May expiry
* Cargill, Wilmar, Bunge were receivers - trade
* Six vessels nominated for delivery - dealers
By David Brough and Chris Prentice
LONDON/NEW YORK, May 7 (Reuters) - Receivers of a massive sugar delivery against expiry of ICE May futures have nominated six vessels to a variety of destinations as they scramble to lock in value ahead of expectations that record output in Brazil will pressure prices.
By Tuesday, estimates for the amount of sugar nominated had gone from 240,000 tonnes to as high as 380,000 tonnes, roughly one quarter of the total delivery sugar, according to traders.
The destinations included China, Bangladesh, India, Algeria, Malaysia and Portugal, according to Michael McDougall, vice president for broker Newedge USA in New York.
Raw sugar delivered against the U.S. May futures contract, which expired on April 30, totalled 1.43 million tonnes, making it the largest ownership transfer through an exchange in at least 24 years. Brazil was listed as the origin for the bulk of the delivery. Traders said they thought it was the largest delivery on record.
Dealers expect the first loadings under the expiry around May 10, under the exchange rules, with the delivery window about 60 to 90 days from the contract expiry.
"As the early crush had not proceeded as fast as expected, physical values are firm in prompt positions," a senior trade source said. "The value for the receiver is in getting the sugar out early."
The slow start to the cane harvest in the main centre-south growing region in Brazil had underpinned cash raw sugar values. May delivery, high quality centre-south Brazilian physical raw sugar traded flat against ICE July futures after the expiry.
The dry weather had boosted availability of nearby sugar, strengthening the hand of the deliverers who service a market that consumes around 170 million tonnes of sugar a year.
Now the receivers will nominate vessels quickly to pile pressure on the deliverers to load sugar in time, and because the sugar is expected to hold more value now than in the future.
Many traders believed that as mills accelerate the crush of cane in Brazil in coming weeks, the risks of further price falls would increase. Weather in Brazil has been ideal for harvesting lately after rains slowed down the cane crush at the start.
The projected record cane crush in Brazil and higher-than-expected output in Thailand and India have pressured raw sugar futures on ICE to more than 2-1/2-year lows.
Traders said that should the weather remain dry, they now anticipate little risk for the deliverers in getting the sugar out for delivery. Should the rains return, that risk would rise.
The delivery against the May expiry is a game of cat and mouse between deliverer and receiver, with the risk of default now seen low by many due to the recent run of ideal harvest weather in Brazil, traders said.
Three brokerages received sugar on behalf of agribusinesses Cargill, Wilmar International and Bunge , and the deliverers were Louis Dreyfus, Noble, ED & F Man Sugar Ltd and Sucden, traders said.
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