NEW YORK (REUTERS) - Singapore-based agricultural commodities trading firm Olam International Ltd will shut its sugar trade desk, spokesman Nikki Barber said on Tuesday (Jan 8), another sign of pressure on trading houses.
The decision comes after raw and white sugar futures on ICE finished 2018 at their lowest levels since 2008, as a global supply glut led to a second consecutive annual decline.
On Tuesday, March white sugar settled up 60 cents to US$345.40 per tonne, compared with USa$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 more than 1 million tonnes of sugarcane, is the latest sugar trading company to have scaled back or sold businesses.
In late November, Biosev SA, the sugar and ethanol maker controlled by trading firm Louis Dreyfus Co, 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 center-south region, the country's main sugar producing region, a source told Reuters at the time.
Weeks earlier the company sold the two mills it owned in Brazil's northeast, a less important sugar producing region, for a combined 273.6 million reais (S$100 million).
Singapore-based agribusiness Wilmar International Ltd scooped up the sugar trading book of rival Bunge for an undisclosed amount in August.
The closing of Olam's sugar desk was earlier reported by Bloomberg.