July 30th, 2012

Sugar Futures – Buyers of sugar from Brazil, the world’s largest producer, are paying a bigger premium for their sweetener after futures prices fell and supplies for immediate shipment remain limited, according to Swiss Sugar Brokers.

Raw sugar for loading in August at the port of Santos, Brazil’s biggest, was offered for sale at a premium of 0.4 cent a pound to the price of the October contract on ICE Futures U.S. in New York, the broker said in a report e-mailed today. That compares with a premium of 0.05 cent to 0.1 cent a pound on July 22, data from the broker showed. At the port of Paranagua, the second biggest, sweetener was at a premium of 0.25 cent a pound to the exchange price, according to the report.

Sugar futures traded in New York fell 5.9 percent last week as output in Brazil’s center south, the country’s main growing region, climbed 2 percent in the first half of July, according to data from industry group Unica. Output for the start of the season through July 15 was down 22 percent as above-average rainfall in May and June delayed the harvesting and shipments, creating congestion at ports.

“The market on the prompt sugar remains tight from the offering side, most likely on tightness created by the July delivery, combined to the congestion at the ports,” said Naim Beydoun, a broker at the Rolle, Switzerland-based company.

Ships are waiting as many as 30 days to load sugar at some terminals of Brazil’s main ports, Beydoun said. ED&F Man Holdings Ltd., Cargill Inc. and Copersucar SA took delivery of about 1.1 million tons of raw sugar when the July contract expired on ICE Futures U.S., the companies said then.

Egypt, which was expected to buy for shipment in September, is in “no hurry,” Beydoun said. Some Chinese buyers have been selling back cargoes they purchased to the market, he said.

“Even though the market is lacking sellers, it is balanced with scarce buyers too for August and September, leaving a disparity of values between the offers and the bids if any,” Beydoun said.

- Isis Almeida in London at Bloomberg.