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UPDATE 1-ICE March sugar deliveries highest in 10 months
March 1, 2012 / 3:51 PM / in 6 years

UPDATE 1-ICE March sugar deliveries highest in 10 months

* Brazil’s northeast supplies lion’s share of sugar

* Guatemala leading deliverer from Central America

* Trade mulls implications of Cargill as sole receiver (Adds details and writes through)

March 1 (Reuters) - The sugar delivered at the expiration of the March raw sugar contract reached 17,325 lots or 880,151 tonnes, the biggest amount brought to the board since the May sugar contract expired in 2011, ICE Futures U.S. data showed on Thursday.

The origins of the sugar were Thailand, Brazil, Central America and the Philippines, the data said. The sole receiver is J.P. Morgan Securities, which brokers said was acting on behalf of U.S. trade giant Cargill.

Cargill, whose sugar operations are run out of Switzerland, confirmed it is taking delivery of the sugar.

“Cargill is the big boy in this delivery,” a broker said. Last October, deliveries stood at a five-year low and the U.S. trade giant was not the biggest player for the first time in 17 years.

Brazil, the world’s top producer and exporter, supplied over half of the deliveries at 9,019 lots. Brokers said the sugar came from the country’s northeast cane crop, which saw a bumper harvest this season.

Cane output in a region often overshadowed by Brazil’s prime center-south region is seen up about 8 percent at 67 million tonnes, leading to an expansion in its share of sugar production to 12 percent of the total from 10 percent.

The only receiver, according to trade sources, is Cargill which has been the main receiver for deliveries over the past few years.

Cargill’s top sugar trader, Jonathan Drake, left the company last year. This is the first delivery in raw sugar after his departure.

Some brokers were wondering if Cargill would shift tactics and not be as active during delivery after Drake left.

But an analyst for a brokerage house said Cargill is still the biggest physical sugar broker in the world and Drake’s departure did not signal any change in trading strategies.

The other main origins are Central America, with Guatemala accounting for 2,647 lots delivered against the tape. They were followed by Nicaragua with 688 lots, El Salvador with 572 lots, Costa Rica with 492 and Honduras with 211 lots.

Thailand, the world’s No. 2 sugar exporter behind Brazil, delivered 2,577 lots and the Philippines, a major producer in the 1970s which resumed deliveries last year, accounted for 1,119 lots.

Traders said the market talk is that most of the sugar will be sold to China or to Middle East countries in the market for supplies ahead of the Muslim holy fasting month of Ramadan in April.

Deliveries are closely watched in the world sugar market as an indicator of demand and possible trade flows.

A large delivery is usually seen as a sign of slow demand, with owners who cannot sell the sweetener putting it up on the futures board. But a big trade house taking delivery suggests it is confident of finding a home for the sugar, and that is considered supportive for futures longer-term, brokers said.

Traders said a small delivery -- such as last October when the amount delivered was a five-year low -- can mean cash demand is strong and keeping sugar from going on the board. (Reporting By Rene Pastor; Editing by Marguerita Choy)

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