White-sugar spread near record high on container shortage worry

White-sugar spreads were near a record high as a shipping container shortage increased demand for break-bulk supplies delivered though the exchange.

The March contract’s premium over May futures was at about $20 a ton, after touching the highest since the spread began in 2019. Shipping rates have risen due to a shortage of containers and demand to stockpile commodities amid the Covid-19 pandemic. That has caused exports to slow from India, the second-biggest producer.

“The container issue is resulting in a higher demand for the white contract structure, as the contract is break-bulk,” said Carlos Mera, an analyst at Rabobank International in London. “It is cheaper to get supplies through break bulk delivery via the exchange than pay so much for containers.”

Sugar prices have also been supported recently by fund buying and concerns about tighter supplies in Thailand and the European Union, as well as firm import demand from Pakistan.

May white-sugar futures gained 1.3% to $441.50 a ton in London, after adding 1.4% last week. The March contract, which expires on Feb. 12, was at $462.10. Raw sugar also advanced in New York.

In other soft commodities, arabica and robusta coffee gained. Cocoa futures fell.