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QCS Market Report 25 October 2018 25 October 2018
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- Sugar prices have continued to rally for almost four straight weeks.
- As the Brazilian election plays out, a stronger real has seen ethanol parity at 16 USc/lb.
- In India, question marks are being raised over exports and whether the 5mmt mandatory exports will be filled.
Macro/currency commentary
- Increased investor caution has seen the AUD chop lower over the last week.
- Despite testing newer lows, the AUD closed the week at USD 0.71.
- Local unemployment numbers highlighted the data calendar for the week, whilst the RBA minutes showed policy makers’ concerns about tighter lending standards.
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QCS Market Report 17 October 2018 17 October 2018
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- Several attempts to break 13 USc/lb did nothing to deter the market’s hunger for higher prices in the week.
- The trade players met at the London Sugar conference last week, expressing mixed views on the current state of play.
- Sugar remains difficult at present, with rising ethanol and a stronger Brazilian real bolstering ethanol parity, whilst the speculative market continues to get short into the market’s strength.
Macro/currency commentary
- US bond yields highlighted the week as the ten-year bonds posted seven-year highs at 3.26 per cent, reflecting the US economy and interest expectations.
- While the market is now short, the bigger picture of US and China trade troubles looms.
- Nothing is preventing the AUD from popping up on pockets of weakness in US data and trade concerns, however, it is difficult now to see the AUD above USD 0.73.
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QCS Market Report 2 October 2018 2 October 2018
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- The sugar market received confirmation this week of the long-expected Government subsidy for Indian farmers, with the announcement of a five-million-tonne export subsidy.
- The market will sit tight as we wait for signs of the Indian export program kicking off.
Macro/currency commentary
- The AUD chopped into lower ground as the US FOMC meeting provided the only stimulus of significance for the week, with the FOMC raising rates on Thursday morning.
- A busy week ahead for the economic data calendar, with the RBA meeting on Tuesday before we see local trade and retail sales data released later in the week.
- US monthly, trade balance and non-farm payrolls print data will be released on Friday night.
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QCS Market Report 17 September 2018 17 September 2018
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- Consecutive weeks of gains were brought to an abrupt end last week, as prices took the elevator down on Friday.
- Chatter around significantly larger Indian export subsidies saw the prices just shy of 50 points lower after the open.
- The latest COT report released as expected, with specs reducing their net short position from 188,738 to 163,835 lots.
- In the face of higher ethanol prices, the Brazilian real continues to weaken as further global trade discussions contain the emerging markets currency.
Macro/currency commentary
- It was a quiet start to the week for the AUD, oscillating around USD 0.71.
- Thursday was the highlight of the local calendar, with the release of better-than-expected unemployment data. As a result, the AUD traded near the week’s high of USD 0.7229.
- The AUD’s run was stunted on Friday night as the US rounded out the week with a strong non-farm payrolls print, and it closed the week near USD 0.7150.
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QCS Market Report 13 September 2018 13 September 2018
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- Sugar producers across the market have enjoyed the recent lift in sugar prices over the past two weeks. After trading at prompt life-of-contract lows, the soon-to-expire October18 contract staged a rally, seeing it above 11 USc/lb.
- In India, the government is yet to provide an export policy, but in an election year, it seems inevitable it will do all it can to incentivise exports.
- Friday night’s Commitment of Traders (COT) report stunned many as the specs moved to a record 188,738 lots net short.
Macro/currency commentary
- A bumpy ride for the AUD over the past week, oscillating through USD 0.7160–0.7230.
- The RBA met on Tuesday, leaving rates on hold as expected. The accompanying statement (which was the main focus for most) maintained a neutral stance, without mentioning the highly publicised independent rate increases passed on by local banks
- The AUD opened higher on Friday, before gains were pared back on firming US data on Friday night.
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QCS Market Report 9 August 2018 9 August 2018
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- The global surplus remains at the forefront for the sugar market.
- There is potential to see the lower end of 10.50 USc/lb, but at what point do we bounce?
- Ethanol parity is seemingly capping the market out at 12 cents.
- Risk, as has been the case for the majority of this year, remains to the downside.
Macro/currency commentary
- Despite the trade war being played out by the US and China, the AUD keeps bouncing off USD 0.7350.
- There remains no good new news for the AUD, as it gyrates in the USD 0.7350–0.7450 range.
- Domestic data more recently has been positive, with the RBA keeping rates on hold this week.
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QCS Market Report 31 July 2018 31 July 2018
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- Again, there appears to be no good news about the market this week.
- This week we saw spreads weaken—most notably, October/March—and Thai premiums soften, given an uptick in exports.
- Brazil’s harvest slowed as more mills shut, favouring ethanol over sugar.
Macro/currency commentary
- It was more of the same for currency markets last week, as the AUD continued to spin its wheels.
- Despite small losses on the week, the AUD managed to hold a USD 0.74 handle.
- Looking ahead, the data calendar fires up again this week, with local and international data scheduled for release.
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Weekly Market Report 25 July 2018
Sugar: The trading week opened with a bang, raw sugar futures erasing life of contract lows seen in the previous sessions. Some technical adjusting, the market’s reaction to bearish news in China and India was unexpected. A refusal of the 10-cent handle buoying sugar prices back into the 11 – 12.50 range. Still, there is no good news around - China revoke import duty exemptions as trade war pressures mount, India likely to raise their FRP for cane and divergence in the white’s market suggesting tightness in ...Read full article -
QCS Market Report 17 July 2018 17 July 2018
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- Raw sugar futures were lower across the board this week, with the prompt October18 contract finishing the week below 11 USc/lb.
- Price action was largely one directional all week as ‘no news’ has been perceived as a reason to continue to sell.
- The numerous Thai and Brazilian producers with substantial hedging left to complete will limit any bounce, as the market gyrates in the 11–13 USc/lb range.
Macro/currency commentary
- Trade wars were back into the fray in a bigger and nastier manner last week, with investors becoming more risk averse about the potential effects of a trade war.
- AUD price action heated up on Wednesday after headlines claimed the US would impose additional tariffs on Chinese imports, sending the AUD sliding to 14-month lows at USD 0.7361.
- In the week ahead, the RBA July meeting minutes are due out, with important employment data released on Thursday.
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Weekly Market Report 10 July 2018
Sugar: Despite a shortened trading week, raw sugar futures slipped lower from Monday through to the US Independence Day holiday before stabilising near 11.50 to round out the week. Declining ethanol prices and a weaker Brazilian Real helped lead sugar prices lower. The Indian Government alluded to stronger export policies for mills were coming. The latest Commitment of Traders report was delayed due to the US holiday - the markets expects the non-index to have continue to add to their net short position further as...Read full article