A new margin requirement on the London International Financial Futures and Options Exchange sent the sugar futures market spiraling this week. Contracts for the sweetener fell by 12 percent after rising to the highest price in almost 30 years just a few days ago.
The Liffe increased the margin requirement to $4,970 per contract, up from the previous level of $3,010 per contract.
NYSE Liffe refined, white sugar futures slid $91.50 to close at $677.10 per metric ton today. In New York, a similar move by the IntercontinentalExchange sent raw No. 11 sugar futures for March 2011 delivery spiraling down 12.7 percent to 26.3 cents per pound.
In the case of the ICE, the margin requirement was raised by 65 percent.
"The EU news is negative, and it has become expensive for some funds to hold positions with the jump in the margin requirements," Ricardo Scaff, a trader at Rabobank International in New York, told Bloomberg News. "The commodity market overall has turned bearish, and a lot of traders have become risk averse."
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