A weak peso has transformed Argentine sugar deliveries against ICE raw sugar contracts from a rarity to a regular occurrence, with potentially more than 100,000 tonnes available to tender against the July contract which expires next month. The origin is seen by some as an "unwelcome guest" due to slow loading rates and high port charges with raw sugar futures expiries traditionally dominated by neighbour Brazil.
Traders said in previous years Argentine millers had been reluctant to export surplus supplies as prices were more attractive on the domestic market. The weak peso has, however, now tipped the balance in favour of dollar-denominated exports. In December 2015, Argentina said it was lifting its currency controls and would allow the peso to float, following promises by President Mauricio Macri for reforms in order to increase exports and spur economic growth.
"Letting the peso float has made Argentina (delivery) more attractive," one senior European trade source said. Sugar from Argentina has been tendered at the last two expiries with 63,000 tonnes against March futures and 54,000 tonnes against May. Another European trade source said: "Argentina might be an unwelcome guest at the expiry due to complicated logistics and its location."
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