A relatively quiet month for raw sugar futures, with the prompt March20 contract trading in a 12–13 USc/lb range following the October19 contract expiry. Price action has been dull, with gains made met by decent pricing from producers who remain largely underpriced. Trade flows remain balanced in the near term, with many analysts expecting a global deficit from Q2 2020 and beyond. Near-record short spec positions have also helped keep prices afloat above 12 USc/lb. While there is support for prices at current levels, large stockpiles in India and China are keeping the market at bay. Guided by their respective domestic prices, NY#11 prices will need to trade above 13.50 USc/lb to incentivise exports from these regions. Going forward, we remain cautious in relation to Brazil’s ability to quickly switch between ethanol and sugar production and a near-record spec net short.
A recovery in the AUD was short lived as expectations for further rate cuts locally, potential RBA quantitative easing and a deepening economic slowdown, outweighed weakness in the USD. Trade uncertainty continues to weigh on the AUD with a ‘phase 1’ deal getting delayed and rhetoric becoming more confusing. The RBA remains in play, with the latest meeting minutes indicating a case could be made to reduce interest rates. As we approach zero, the impact of cutting rates appears to need more time to take full effect.