Tag Archives: sugar futures

ICE’s plans for white sugar futures

October white sugar futures closed $16.50 lower at $483.70 per tonne. While December futures declined $15.80 to $473.00 per tonne.

Reports indicated that Intercontinental Exchange (ICE) the new owner of the London white sugar futures contract may offer container delivery which would be more in line with a growing trend in the industry. The white sugar futures contract currently only accepts deliveries in bulk vessels,  This is seen by some as unrepresentative of the market given current growth in container trade which is for many becoming the preferred method of transport in the physical sugar market.

Also on the cards is a possible launch of a new refined sugar contract for ICUMSA 150 which is a lower grade of refined sugar compared with ICUMSA 45 and would better reflect sugar delivered originating in Brazil, India, Thailand and Palistan.

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Hedge funds seen long sugar

Hedge funds and speculators seen going long in the New York sugar futures market according to Commodity Futures Trading Commission.  Longs exceeded shorts by over 52,000 ICE futures contracts.  Overall net long positions increased by 14,965 from last week.  This is while those engaged in the physical growing and processing of sugar and likely to be hedging were short a net total of 46,426 contracts compared with last week which is an increase of over 14%.

ICE increases margins on No. 11 sugar futures

ICE today announced a 17% increase in its margin requirements for the No.11 raw sugar futures contract.  Effective from 11 July 2011 the new margin requirement will be USD 2,100 up by USD 300.

Brazil’s Center South sugar production lower than 2010/11 season

UNICA is expected to announce that sugar production in the Center South region of Brazil is expected to be lower than production during the 2010/11 season which amounted to 33.5 million tonnes.  Production is therefore short of the 35 million tonnes estimated by the market for the 2011/12 season.

The news sent sugar prices soaring to achieve the highest daily gains of 2011 as Brazil approaches peak harvest season.  Older cane ratoons, dry weather in the second half of 2010 and higher sugar prices encouraging delays in replanting and use of older ratoons resulted in lower sugar yields.  The Center South produces most of Brazil’s sugar.

Sugar prices shaken by earthquake

ICE raw sugar futures slid by over 7% to 25.65 cents per lb, the lowest this year on selling following the Japan earthquake and nuclear fears.  This is some way off recent 30 year highs.  Demand is likely to be impacted in the world’s third largest economy.  Meanwhile May white sugar also fell $39.70 to $667.10 per tonne.  The fall in prices which has little to do with the valuation of sugar may pave the way for physical buyers to step in.

 

Circuit breakers spoil the party for commodity funds and algorithmic traders

ICE may accept advice of the World Sugar Committee and introduce circuit breakers when sugar futures, experience price spikes or high volatility.  Trading would be interrupted or halted when limits are breached.  This may decrease the volume of sugar futures trading if funds, computer and algorithmic traders and those trading volatility reduce exposure to the market.  However, the move is intended to reduce commodity price volatility and agflation.

Rule 3.36. World Sugar Committee

(a) The World Sugar Committee shall be an Exchange Committee and shall consist of at least seven (7) and not more than twenty-one (21) individuals who are actively engaged, or employed by a firm that is actively engaged, in trading world sugar. The Board shall endeavour to appoint representatives from diverse interests within the world sugar community, such as industry representatives, FCMs, asset managers and traders.

(b) The Committee shall have and may exercise only the power or authority of recommending to the Board any modifications to the contractual terms and conditions and advising the Board with respect to World Sugar Futures and Options Contracts.

Middle East tension and weaker dollar keep sugar market on edge

Protests have been broken up in Bahrain where two protestors were killed. The protesters are primarily from the Shiite majority. Protests are also planned tomorrow in Libya. Meanwhile Iran has announced that two of its war ships are to pass through the Suez Canal for the first time since 1979.  Israel has announced that it viewed the move as a hostile act.

Renewed tensions in the Middle East following the Tunisian and Egyptian revolutions, yesterday resulted in a sharp rise in the Brent crude futures contract which closed at $103.78 per barrel.  Rising oil prices provide ethanol and sugar futures with support and along with  a weaker dollar, with further dollar weakness expected, March raw sugar futures ended up 3% to close at 31.54 cents per lb.