• QCS market report July 2021

    Sugar

    • Raw sugar futures seesawed this month as the July-21 contract expired and a lack of fresh fundamental inputs pushed the market around.
    • Given the lack of fresh fundamental news, sugar market participants kept a keen eye on CS Brazil and its current crush.
    • Sugar saw some follow-through weakness from the grain market last week and looks technically soft in the near term.

    Macro/currency commentary

    • AUD price action chopped lower over the last month.
    • Key drivers for global markets appear to be the trajectory of rate hikes and tapering of quantitative easing programs around the world from the respective central banks.
    • The AUD made a clear break from its painstaking USD 0.77– 0.80 range and looks set to face more downside pressure.
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  • QCS Market Report May 2021

    Sugar

    • 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.
    • There is speculation about shortfalls in the Brazilian crop, after the latest UNICA report showed a slower crush in Brazil’s CS region.
    • The Brazilian crop output will be the focus going forward, with possible changes in output, sugar mix and yield key drivers for prices.

    Macro/currency commentary

    • The AUD has chopped over a USD 0.7688 – 0.7889 range tin the past 30 days, 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.
    • Locally, the RBA upgraded its forecast for employment and kept interest rates on hold.
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  • QCS Market Report April 2021

    Sugar

    • Raw sugar prices jumped more than 3% in mid April to record 7-week highs, underpinned by bad weather for crops in Europe as well as Brazil, and positive macroeconomic indicators.
    • Global forecasts for 2021/22 are now for a smaller sugar surplus of around 2.9 million tonnes, primarily due to recent crop downgrades in Brazil.
    • It is now anticipated that Brazil’s production may drop from 38.5 million tonnes last season to between 31–33 million tonnes, with the possibility of further reductions in forecasts if rainfall does not improve.

    Macro/currency commentary

    • The AUD has continued to trade in a USD 0.75–O.78 range, with no signs of moving out of this range.
    • The RBA’s April meeting provided little news to influence the market.
    • Positive US news on the COVID-19 vaccination front boosted risk sentiment, with the vaccine rollout ahead of target.
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  • QCS Market Report March 2021

    Sugar

    • Since the expiry of the Mar–21 contract some weeks ago, the new prompt May–21 contract has traded sideways in the 15.50–16.50 USc/lb range.
    • Fundamentally, there have been very few new inputs for the sugar market other than crop updates.
    • Brazil remains the key focus for sugar prices going forward.

    Macro/currency commentary

    • The AUD pulled back nearly 4% of gains, which saw it trade above three-year highs at USD 0.80.
    • However, price action since then has underwhelmed, with rising treasury yields, a drop in equities and concerns about higher inflation keeping the market at bay.
    • Attempts to break USD 0.78 continue to be rejected with technical resistance and demand.
    • Locally, the economic data flows and demand for natural resources continue to float the AUD and are key to providing forward guidance.
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  • QCS Market Report February 2021

    Sugar

    • The volatility in sugar price action followed that of macro sentiment, commodities and equities.
    • With very little fundamental news to hand, specs continue to push the market around following the macro environment.
    • The recently expired March 21 contract settled at 17.53 USc/lb.
    • Green Pool Commodity Specialists’ latest trade flows predict a small move from surplus to deficit through until Q4 2021.

    Macro/currency commentary

    • The reflation story helped lift the AUD to 24-month highs above USD 0.80 over the past month, before being evaporated in all but two sessions.
    • Firming equities and commodity prices were the narratives driving USD weakness.
    • Bond yields followed the same path as equities and commodities, though have been less talked about.
    • A breakout of key new highs sent traders into a flurry and the AUD lower.
    • The AUD may move higher again, given the current outlook for the economic recovery and positive local news.
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  • QCS Market Report January 2021

    Sugar

    • Raw sugar futures chopped higher over the past month as the Mar–21 contract achieved life-of-contract highs at 16.75 USc/lb off the back of US dollar weakness.
    • Fundamental news remained quiet following India’s export subsidy announcement in December. At least two million tonnes has been contracted for Indonesia, while Indian millers will continue to seek out homes for the remainder of the proposed five million tonnes of exports.
    • Thailand’s crush is lagging behind the same period last year, as anticipated by the market.
    • From a fundamental perspective, all eyes will be on the Brazil crop in the coming months.

    Macro/currency commentary

    • The AUD has been well supported in the last month by a weakening USD, and has seen fresh 33-month highs at USD 0.7816.
    • Ever-increasing COVID-19 numbers and political unrest have weighed heavily on the US dollar and economy.
    • Investors have moved money from the typical safe havens of the USD and gold, towards ‘riskier’ assets such as the US equity market and AUD.
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