Money managers turned bullish white, or refined, sugar traded in London for the first time in almost two months in the week ended June 25, according to NYSE Liffe, the derivatives arm of NYSE Euronext.
The net-long position, or a wager on a higher market, totaled 2,857 futures and options, the Commitments of Traders report published on the exchange’s website today showed. That reverses a net-short position, or bets on lower prices, of 4,891 contracts a week earlier. The bullish bets are the first since May 7, exchange data on Bloomberg showed. White sugar climbed 5.7 percent in the seven days to June 25.
“We think the most puzzling and significant feature in the current sugar market is the continuing strength in whites,” Robin Shaw, an analyst at Marex Spectron Group in London, said in a report e-mailed today. “This strength in white prices has caused millions of tons of raw sugar to be converted into whites. And that conversion cannot be undone.”
While raw sugar fell 13 percent this year as supplies outpace demand, the white variety dropped 7 percent. The global sugar surplus will be a record 10 million metric tons in the 2012-13 season that started in October in most countries, the International Sugar Organization estimates.
The “massive surplus of raw sugar is beginning to look considerably less massive” as refiners turn the raw sweetener into the white variety and mills in the main growing region of Brazil, the world’s leading producer, favor ethanol at the expense of the sweetener, Marex Spectron’s Shaw said. Rains in the South American nation may also mean that mills will not be able to process all of this year’s crop, he said.
In cocoa, money managers reduced their net-long position by 25 percent, exchange data showed. The net-long position fell to 24,786 futures and options from 33,099 contracts a week earlier and was the smallest since April 9. The beans used to make chocolate slid 1 percent in the period.
Money managers’ net-short position in robusta coffee fell to 9,667 contracts from 9,671 lots a week earlier, the data showed. The beans used to make instant coffee and espresso declined 0.8 percent in the week.
In feed wheat, money managers boosted their net-short position to 534 contracts from 494 lots a week earlier. The grain fell 2 percent in the period.