Wilmar Takes Sixth Straight Sugar Delivery as Shortage Looms

  • Most of the sugar to come from Brazil; some from Argentina
  • Cargill, Copersucar venture said to have taken 3,688 lots

Wilmar International Ltd. took delivery of raw sugar against expiring New York futures for a sixth straight time amid a looming global shortage of the sweetener, according to people familiar with the transaction.

The Singapore-based commodity trader took 20,018 lots, or about 1.02 million metric tons, to settle the expiration of July futures on the ICE Futures U.S. exchange, said the people who asked to remain anonymous because the information isn’t public. The company, which entered the sugar market in 2010, has become a powerhouse, with clients in many importing countries.

“Wilmar is probably the biggest mover of sugar in the world at the moment," Robin Shaw, an analyst at futures and options broker Marex Spectron Group Ltd. in London, said by phone. “They repeatedly take delivery, they kind of suck up sugar and leave the physical market looking very tight."

Most of the sweetener will come from Brazil, the world’s largest producer, said Nick Gentile, managing partner at Nickgen Capital Management & Consulting LLC. Some sugar from Argentina will probably also be delivered, he said. July raw-sugar futures expired Thursday at 20.15 cents a pound. ICE will publish official delivery figures later today.

Wilmar Assets

Wilmar owns a 29.5 percent stake in Cosumar SA in Morocco, the second-largest refiner in Africa, according to information on the company’s website. In 2013, it also signed an agreement to be the sole supplier of raw sugar to Cevital, which runs refineries in Algeria. The company also has refining assets in India through an acquisition of a stake in Shree Renuka Sugars Ltd. It also has other refining facilities in Australia, Indonesia and New Zealand.

The delivery helps guarantee supplies for Wilmar at a time global demand forecast to to outstrip production for a second year in the season that starts in October, Gentile said. The premium that white or refined sugar traded in London commands over raw sweetener surged 20 percent this year.

Wilmar “does have the refineries to process the sugar,” Gentile said in a telephone interview from Staten Island, New York. Given the premium’s increase, “this might make economic sense for them. Everybody is anticipating the deficit to show” early next year, he said.

Sugar Price

Raw-sugar futures surged 68 percent in the past year on ICE in New York, making it the best performer on the Bloomberg Commodity Index.

Alvean, a joint venture between Cargill Inc. and Copersucar SA, which also has a large number of clients in importing countries, bought another 3,688 contracts, or about 187,000 tons, to settle the July contract, according to people familiar with the delivery, who asked to not be identified because the information is private.

Cofco Agri, a unit of China’s largest food company, delivered about 795,000 tons, according to two people familiar with the matter, who asked not to be identified because the information is private. That made the company the biggest seller in the expiration.

"The expiry shows divergent views on physical sugar," James Kirkup, a broker at ABN Amro Clearing Bank in London, said by e-mail. "Cofco and Wilmar both have China as a strategic destination but they are opposite sides of the expiry."

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