Raw sugar futures traded higher over a 200-point range in the last month, with the prompt Jul-21 contract making life-of-contract highs above 18 USc/lb. Speculation about potential shortfalls in the centre-south (CS) Brazil crop have become more prevalent, after the latest UNICA report for 2H April showed a slower-paced crush in Brazil’s CS region. Whilst early crushing numbers present some upside opportunities for prices, it is believed that cane is being left longer in the field to mature before harvest.
GreenPool Commodities released its quarterly trade flows this month. Some tweaking of the CS Brazil output number has seen a 229kt change in global supply from a 100kt deficit to a 129kt surplus. CS Brazil output will be the focus going forward, with possible changes in output, sugar mix and yield key drivers for prices.
The Australian dollar has chopped over a similar range to sugar in the past 30 days (USD 0.7688 – 0.7889 ) as global reflation returns to the radar against strong commodity prices. Iron ore and oil prices have led the charge for commodity currencies this year, as demand heightens for natural resources. We have started to see some solid US economic data of late, including payroll and core inflation data, with some Federal Reserve officials hinting at the tapering of quantitative easing. Locally, the RBA upgraded its forecast for employment and kept interest rates on hold. Price action was muted as the market looks for indications of a potential raising in interest rates.