• QCS market report 14 October 2019

    Sugar

    • Raw sugar futures rallied in the run up to the October 19 expiry and continued to strengthen afterwards, before losing momentum and giving back two weeks’ worth of gains.
    • Prices have traded freely with the October 19 contract off the board
    • Indian sugar is still expected to hit the global market through Q1–Q2 2020, however prices will need to move back into the 13–14 USc/lb range to incentivise exports from the region.

    Macro/currency commentary

    • An uninspiring month for the AUD, which gave up prior gains that had seen the dollar climb back up to USD 0.69.
    • The RBA continued to ratchet up easing expectations by cutting interest rates to a record 0.75%. 
    • Looking ahead, US and China trade discussions remain at the forefront of AUD drivers in the near term.
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  • QCS market report 19 September

    Sugar

    • Raw sugar futures have drifted lower over the past month as the excess global supply of raw sugar weighs further on prices.
    • Prompt October19 contract succumbed to the pressures, making life of contract lows below 11 USc/lb.
    • With the market well supplied through Q4 2019, analysts are predicting Indian exports will hit the global market through the first half of 2020.

    Macro/currency commentary

    • A generally positive month for the AUD, trading back toward USD 0.69 on a weaker USD and sentiment around the ongoing trade discussions.
    • With US/China trade talks set to resume next month, not many believe this discussion will provide any relief to the struggles of the US economy.
    • Locally, the RBA looks on track to cut rates again in 2019. Q2 GDP results and the latest employment figures (further weakness in the labour market) were well below the RBA’s forecast figures.
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  • QCS market report 12 August 2019

    Sugar

    • Raw sugar futures have chopped over a 105-point range in the last month.
    • Brazil has continued to reduce sugar output with little effect as oversupply remains an issue for the global market, thanks in large to excess Thai and centrals sugar.
    • The Indian government announced that it will extend the buffer stock to 4mmt, from the previous 3mmt this year, and is expected to make a formal announcement on its 19/20 export policy this month.

    Macro/currency commentary

    • The AUD has been a runaway train over the past month, trading from a mid-July USD 0.7082 high to 10-year lows in the last week at USD 0.6677.
    • Trade tensions between the US and China continuing to dominate market sentiment.
    • A busy week on the economic data calendar as the market looks for further policy easing justification in the local employment numbers on Thursday.
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  • QCS Market Report 17 July 2019

    Sugar

    • There was a record July19 contract expiry delivery, as a remarkable 2.1 mmt of sugar was delivered to the tape.
    • Brazilian mills continue to minimise sugar output as demand for ethanol and firm US corn prices support ethanol prices.
    • The Indian Government is set to approve another tranche of 5mmt of exports, with weather being the key driver for the region.

    Macro/currency commentary

    • A weaker USD in the face of an impending historical US interest rate cut by the US Federal Reserve has seen the AUD bounce back above USD 0.70.
    • RBA July meeting minutes are due out this week with the market looking for hints around the timing of another interest rate cut at home.
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  • QCS Market Report 19 June 2019

    Sugar

    • After spending much of Q2 below 12 USc/lb, prompt July futures have surged back towards 13 USc/lb.
    • Brazil continues to produce more ethanol over sugar, despite weaker WTI oil prices, with stronger demand for ethanol keeping ethanol prices buoyant.
    • The question remains if and how much sugar India will export this year. If the Indian government can solve the supply glut, then prices are expected to come under pressure again.

    Macro/currency commentary

    • A busy few weeks for the AUD as the Reserve Bank of Australia (RBA) cut interest rates at its latest meeting and indicated more cuts are on the way in 2019.
    • This week we saw the US Federal Reserve leave rates on hold at 2.5%.
    • The AUD continues to trade near USD 0.69. Topside resistance is expected if the market returns toward USD 0.695.
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  • QCS Market Report 15 May 2019

    Sugar

    • It was a turbulent week for raw sugar futures ahead of the annual New York sugar week, with heavy fund selling leading the market into the abyss.
    • Following last week’s negative price action, the market appears to have stabilised at technical support levels near 11.70 USc/lb.
    • As a bounce back above 12 USc/lb looms, large Thai producer pricing likely sits above 12.50 USc/lb, capping too much optimism.

    Macro/currency commentary

    • The AUD capped off a big week below USD 0.70. The local unit remained under pressure, with strong US data and no policy change from the RBA.
    • Looking ahead, markets will remain cautious as the trade war continues to swing prices around, based on rhetoric.
    • Thursday sees the local employment report for April, which will be key for the RBA’s meeting next month.
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