The prompt March21 raw sugar futures contract settled at an average rate of 15 USc/lb during November. Largely driven by macro factors such as the US Presidential election, interest in the speculative market helped keep the futures market buoyant. A few tests of 15.50 USc/lb failed to kick on, as a 15 USc/lb floor looked stable.
On the fundamental side, India continued to hold most of the market’s attention. Subsidised or not, it is expected that India will export sugar to support tighter global trade flows through 1H 2021. An announcement on India’s export subsidy program may see the market move 50–100 points lower, but little impact on prices beyond that is anticipated.
November was a strong month for the AUD, with trading ranging from a USD 0.6991 low to a high of USD 0.7373 toward the end of the month. The US Presidential election came and went — complete with the expected fireworks. Incumbent President Donald Trump failed to win key battleground states and, despite (unfounded) claims of widespread voting fraud by Trump and his supporters, the result was a clear win for Democratic candidate Joe Biden, albeit not the landslide win predicted by most polls.
With the US election over, the market’s attention moved back to COVID-19, as Moderna and Pfizer registered successful trials of vaccines. Oxford University also announced a successful trial of a vaccine developed in conjunction with AstraZeneca.
The RBA cut interest rates to 0.1% as widely expected, with the commentary clearly underlining a lack of intent to move to negative interest rates unless widely adopted in other parts of the world. While the US FOMC is in no rush to cut rates further, the political uncertainty and timing of the inauguration of the new US President may test the current policy measures. Key inflation and employment data in the US will be crucial in the coming months.