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QCS Market Report 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
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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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QCS Market Report 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 20 June 2018
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- Raw sugar futures struggled to hold in the face of persistent downward pressures around anticipated output in major producing regions
- A considerably weaker Brazilian real afforded producers an opportunity to do some pricing.
- Looking ahead, there is mention of a potential El Nino weather event, although Thai and Indian crops are unlikely to be disrupted, given timing.
Macro/currency commentary
- Despite a disruptive weekend following the G7 summit in Quebec, currencies started the week relatively quietly.
- As expected, the US Fed lifted rates another 25 bps, signalling that another two hikes in 2018 are likely.
- The AUD moved lower in response to the central bank’s statement and has continued to slide since.
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Weekly Market Report 13 June 2018
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- Large swings either side of 12 USc/lb are the norm in this week’s daily sugar chart.
- Raw sugar futures seesawed on a weaker Brazilian real, allowing for heavy producer selling to be absorbed by fund buying.
- The Indian Government announced its relief package for the struggling local sugar market.
Currency/macro commentary
- Topside momentum for the AUD stalled last week above USD 0.7675.
- The RBA left interest rates on hold as expected, which saw the AUD briefly below USD 0.7600.
- US President Trump has declared the US-North Korea summit a success, and that it has led to a ‘secured commitment for denuclearisation’.
- The USD has performed well since, with CPI data releasing in line with expectations.
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Weekly Market Report 4 June 2018
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- A three-week recovery in raw sugar futures was stopped in its tracks on Friday night, retracing any headway made in the previous weeks.
- Newswires were highlighted by the resignation of Brazil’s Petrobras CEO, and fears of a return to a fixed-price gas agreement helped drive sugar prices lower.
- With large selling pressure above 13 USc/lb, news of rain and an end to the truckers’ strike did little to help sugar markets’ fortunes.
Currency/macro commentary
- Seesawing price action saw the AUD slide below USD 0.7500 mid-week, before rebounding back above USD 0.75.
- Positive price action was capped as the monthly US Non-Farm Payrolls data beat expectations on Friday night, with US stocks, treasury yields and the big dollar all higher.
- A busy week ahead on the economic data calendar, with the RBA meeting on Tuesday expected to leave rates on hold, with little change to the accompanying commentary.