* 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 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
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.