Brazil Raw Sugar Discount Narrows on Demand, Ship Backlog
Buyers of raw sugar from top producer Brazil are getting a smaller discount for their sweetener because of higher demand and a backlog of vessels at the country’s main ports, according to Swiss Sugar Brokers.
Raw sugar for loading next month at the port of Santos, Brazil’s biggest, last traded at a discount of 0.05 cent a pound to the price of the March contract on the ICE Futures U.S. exchange in New York, the Rolle, Switzerland-based company said in a report e-mailed today. That compares with a discount of 0.3 cent a pound on Jan. 21, data from the broker showed.
A record soybean crop in Brazil is creating a backlog of ships at ports as the harvest begins and corn is still being shipped. The loading delays are a concern for sugar traders as some terminals used to load the sweetener switch to grain and oilseeds at this time of year, said Michael McDougall, head of the Brazil desk at Newedge Group in New York. More time spent loading the extra grain supplies may delay sugar shipments later.
“There has been more demand and some short covering,” Naim Beydoun, a broker at Swiss Sugar Brokers, said by phone today, adding that demand was coming from nations including India and China. The backlog of vessels waiting to load grains may have also “played a role,” he said.
The switching to grains of some terminals at the port of Paranagua may limit the amount of sugar from Brazil to be delivered when the March futures on ICE expire at the end of next month, according to the report. Buyers may have to pay more for their sugar at the port of Santos instead, Beydoun said.
As many as 126 vessels were scheduled to load 6.2 million metric tons of soybeans and corn as of yesterday, according to shipping agency Unimar Agenciamentos Maritimos Ltda. That compares with 72 ships carrying 2.8 million tons a year earlier and 47 vessels with 1.5 million tons in 2011, its data showed. The wait at Santos, the country’s biggest port, may be as many as 35 days, while the wait in Paranagua may be 15 days.
In Thailand, the world’s second-biggest exporter, buyers of raw sugar are paying a bigger premium for their sweetener. Thai sugar for loading from March to May 15 was trading at a premium of 0.65 cent to 0.85 cent a pound to the exchange price, according to the report. That is up from 0.55 cent to 0.7 cent on Jan. 21.
Raw sugar for March delivery rose 1.6 percent to 18.68 cents a pound by 7:15 a.m. in New York.
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.