Record Delivery of Sugar Heads to China as Wilmar International Closes Deals

Wilmar International, a Singapore-based food trader, has closed deals to sell a significant portion of the record physical delivery of sugar to China, according to sources familiar with the matter. The delivery, which amounted to 2.87 million metric tonnes, was the largest in the history of sugar futures trading in New York. Wilmar, which took nearly all of the delivery, has also secured agreements to send some of the sugar to Indonesia, Egypt, and India.

The traders, who work for major players in the global sugar trade, estimate that Wilmar has sold between 1 million and 1.5 million tonnes to China. This surge in Chinese buying follows the country’s decision to resume sales of its sugar reserves due to low stocks and high prices. The Brazilian-origin sugar will be loaded from Brazilian ports between early October and December 15, filling approximately 45 Panamax-size vessels.

The traders believe that Wilmar sold the sugar at a lower price to secure a large book, ensuring profitability due to the substantial volume. The delivery was facilitated by a combination of factors, including the record Brazilian crop, elevated interest rates, and the reduced premium between the October and March contracts at the Intercontinental Exchange.

However, logistical challenges may arise for Wilmar and the delivering parties, as the rainy season in Brazil could potentially cause loading delays. Despite this, Wilmar has already nominated the first six vessels for loading this week, with most of the loading set to take place in Santos and Paranagua ports.

Sugar analyst Claudiu Covrig warns that the massive delivery could lead to significant lineups and waiting times, especially in October and November when sugar vessels compete with grain exports and face potential delays due to the rainy season.

Overall, the record delivery of sugar to China signifies the strong demand for the commodity and highlights Wilmar International’s strategic position in the global sugar trade.