A bounce off 15.15 cents highlighted price action for the month. The approach toward ethanol parity (15 cents) triggering decent support seeing sugar back above 16 cents. Another large expiry (May-17) saw 1.5mmt of sugar delivered to the tape by a single deliverer and 5 quality receivers. Perceived bullishly by the market, a possible change in sentiment reversed days later as commodities took a battering. A decision on a Brazilian import tariff has been delayed 1 month, with an increase supportive for prices. For the first time since September 2016, specs have moved to a net short position. The breakdown shows commercials still largely under-priced – short term weakness is expected should they begin to hedge. In the short term, the view remains neutral with weather risks driving any moves higher.
A joyless month for the AUD posting 5 month lows at 0.7330. AUD weakness has been attributed by a combination of a firming USD (on expectations for a June Fed rate hike) and soft commodity prices. Markets are 100% priced on a June rate hike, with recent Fed speakers supportive of 2 rate hikes this year. More recently, a slight bounce in the AUD on constructive terms of trade, which surprised the market. The Aus. Federal Budget release left markets mostly unscathed. Near term support for the AUD likely as the USD and yields continue to lose ground. Although, sense some resistance to the topside nearing 0.7450. Further clarity and responses to reduced OPEC production will hold markets for the near term awaiting June FOMC.