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.
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.
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.
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.