NEW YORK •Singapore-based agricultural commodities trading firm Olam International will shut its sugar trade desk, spokesman Nikki Barber said on Tuesday, another sign of pressure on trading houses.
The decision comes after raw and white sugar futures on ICE ended last year at their lowest levels since 2008, as a global supply glut led to a second straight annual fall.
On Tuesday, March white sugar was up 60 US cents to US$345.40 per tonne, compared with US$390.90 a tonne a year ago.
"It's not really a shocking statement, only because we know the margins are terrible in sugar," one US trader said.
Olam, which owns two sugar mills in India and crushes over a million tonnes of sugar cane, is the latest sugar trading house to have scaled back or sold businesses.
In late November, Biosev, the sugar and ethanol maker controlled by trading firm Louis Dreyfus, hired an investment bank to seek potential buyers for some or all of its plants in Brazil.
Biosev had retained a unit of Dutch bank Rabobank to explore opportunities for its nine production units in Brazil's centre-south region, the country's main sugar producing zone, a source told Reuters then. Weeks earlier, the firm sold the two mills it owned in Brazil's north-east, a less important sugar producing region, for a combined 273.6 million reais (S$100 million).
Singapore-based Wilmar International scooped up the sugar trading book of rival Bunge for an undisclosed amount in August.
The closing of Olam's sugar trading desk was earlier reported by Bloomberg.