JPMorgan Takes Delivery of Almost 1 Million Tons of Sugar


JPMorgan Takes Delivery of Almost 1 Million Tons of Sugar

A JPMorgan Chase & Co. unit took delivery of almost 1 million metric tons of raw sugar, the most for the commodity since 2009, to settle the expiring March futures contract in New York.

JPMorgan Futures accepted delivery on 18,748 sugar contracts, or the equivalent of 952,398 tons, ICE Futures U.S. said yesterday on its website. That represents 9.2 percent of this year’s U.S. consumption as estimated by the government. Prices climbed to the highest level in almost three weeks in New York trading today.
Raw sugar doubled in 2010’s second half on concern that global supplies would trail demand following crop damage in Australia and India. The sweetener touched a 30-year high of 36.08 cents a pound on Feb. 2. May-delivery sugar trades at a higher price than the July contract, a so-called backwardation that may signal concern about supply.
Agricultural prices have a “lot of risks to the upside,” Abah Ofon, an analyst at Standard Chartered Plc, said today by phone in Singapore. “When there’s a risk of supply disruptions, a lot of users would rather take delivery now.”
Raw sugar for May delivery climbed 0.52 cent, or 1.8 percent, to 29.78 cents a pound at 10:35 a.m. London time on ICE Futures U.S. in New York. Prices reached 29.92 cents, the highest level since Feb. 11. White, or refined, sugar for May delivery gained $13.40, or 1.8 percent, to $746.80 a ton on NYSE Liffe in London.
Justin Perras, a JPMorgan spokesman, declined to comment when reached by telephone in New York, where the company is based. JPMorgan is the second-largest U.S. bank by assets.
The delivery was the biggest since 1.35 million tons were delivered to satisfy the July 2009 contract, exchange data show. Each sugar contract is for 112,000 pounds (50.8 metric tons). The U.S. will consume 11.41 million short tons (10.4 million metric tons) in the year that began Oct. 1, the Department of Agriculture estimated on Feb. 9.
“The delivery was above the 700,000 metric tons we were expecting,” said Marcos Mine, head of sugar and ethanol trading at ICAP Brasil.
More than two-thirds of the deliveries were supplies from Brazil, the world’s largest producer and exporter, according to the ICE report. The rest came from Central America and Thailand. March 15 is the last day for delivery against the recently expired contract.
Demand exceeded supply by about 8 million tons last year in the global market, Ofon said. Improving supplies from Brazil may move the market toward a balance, with either a shortage or an oversupply of 1 million tons this year, he said.
“Inventories are very low, and users are rebuilding their stockpiles,” Ofon said. “It’s a backdrop against a very tight market.”
The global sugar market will be in deficit for a third year in the 2010-11 marketing season, C. Czarnikow Sugar Futures Ltd. said yesterday. The shortfall comes to 3.7 million tons now, it said.
Brazilian raw-sugar exports declined 6.5 percent from a year earlier to 915,900 tons in February, data from the country’s Trade Ministry showed yesterday.
Arabica coffee for May delivery dropped 0.4 percent to $2.682 a pound on ICE. Robusta coffee for May delivery slid 0.8 percent to $2,366 a ton on NYSE Liffe.
Cocoa for May delivery added 0.1 percent to $3,625 a ton in New York. Cocoa for May delivery rose 0.5 percent to 2,336 pounds ($3,804) a ton in London.
To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Isis Almeida in London at ialmeida3@bloomberg.net.

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