The premium white sugar commands over the raw variety gained for a sixth day to the highest in almost a year as supplies that can be delivered to the futures market when the August contract expires in London remain limited. Cocoa slipped.
White, or refined, sugar was $132.43 a metric ton more expensive than the raw sweetener by 11:03 a.m. in London, the most since July 2. That compares with $123.3 a ton for the most active contract in the last trading session and represents a 23 percent increase over the past week, exchange data compiled by Bloomberg showed. White sugar for August was also at a premium to October, a market structure known as backwardation that may signal tight supply. The August contract in London expires on July 16.
“Although at this time of year there are few deliverable origins, and although available origins such as Mexico have technical problems which may prevent them being delivered, this huge and sustained premium persuades us that white sugar is in deficit,” Robin Shaw, an analyst at London-based broker Marex Spectron Group, wrote in a report-emailed today, citing “the absence of deliverable sugar for August.”
White sugar for August delivery jumped 2.6 percent to $509.50 a ton on NYSE Liffe in London, after gaining 1.7 percent in the past trading session. Raw sugar for delivery in October climbed 1.2 percent to 17.13 cents a pound on ICE Futures U.S. in New York.
“More refined can be produced quite quickly by the toll refineries, which will convert this extra demand from white to raws,” Shaw said. “At some stage we expect to ‘pay’ for this high white premium by a period of lower premiums, especially as from October the new Northern Hemisphere beet crops will all be producing fresh white sugar.”
White sugar for August delivery was $25.04 a ton more expensive than the futures for October, a 30 percent increase from the past trading session. In New York, the price gap between the July and October contracts has also narrowed. That is partly due to buying from refiners to transform raw sugar into the white variety, according to Marex Spectron.
Robusta coffee for delivery in September gained 0.5 percent to $1,751 a ton on NYSE Liffe. Arabica coffee for delivery in September gained 0.2 percent to $1.1955 a pound on ICE.
Cocoa for September delivery fell 0.6 percent to 1,429 pounds ($2,196) a ton in London. Cocoa for September delivery retreated 0.1 percent to $2,150 a ton 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.