LONDON (Reuters) - Sudan is a likely prime destination for sugar to be delivered against Friday’s ICE December futures expiry and could become an arbitrage opportunity for EU sugar imports, trade sources said on Monday.

The risk of pirate attacks off the Horn of Africa and booming domestic demand have helped to turn Sudan into one of the world’s biggest white sugar importers this year.

“It is certainly very possible (Sudan as a destination) as it’s still a market (for deliverable white sugar) and thus fungible with No.5 (white sugar futures) delivery terms,” said a senior European refinery executive, referring to the Nov. 13 expiry.

Asked if Sudan was likely to be a primary destination for white sugar deliveries against the December expiry, another senior European trader said, “Based on previous expiries, yes.”

Sudan, as well as some other Middle Eastern and West African countries such as Iraq, Mauritania and Ghana, are likely to be the main markets for sugar deliveries against the expiry.

Sudan is believed to have been an important destination for white sugar deliveries in previous expiries, traders said.

At the last expiry against the October contract, a total of 114,450 tonnes of white sugar were delivered.

European trade sources said increased flows of white sugar had entered Sudan in recent months from origins such as Thailand and India, and were believed to total more than 1.4 million tonnes over the year, a sharp rise over previous seasons in which some 800,000-900,000 tonnes entered the country.

Some of the white sugar was believed to be re-exported from Sudan to neighbouring countries.

European trade sources said traders could take advantage of arbitrage opportunities by shipping Sudanese sugar to the EU under a preferential trade agreement with the bloc, and importing white sugar to meet Sudan's domestic requirements.

EU refiners are raising raw sugar imports due to a poor domestic beet harvest and falling stocks, trade sources said. {ID:nL8N1311Z4]

"Domestically produced Sudanese sugar has access to the EU market under the EBA (‘Everything But Arms’) agreement,” one European trade source said.

“Thus arbitrage opportunities could be of interest too.”

Everything but Arms (EBA) is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty-free and quota-free, with the exception of armaments.