• QCS Market Report November 2019 2 December 2020

    Sugar

    • The prompt March21 raw sugar futures contract settled during the month at an average rate of 15 USc/lb.
    • 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.

    Macro/currency commentary

    • 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. While a clear win for Democratic candidate Joe Biden, it was not the landslide predicted by most polls.
    • Market attention moved back to COVID-19, as Moderna and Pfizer registered successful trials of vaccines and Oxford University 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.
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  • QCS Market Report January 2021 3 February 2021

    Sugar

    • 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.

    Macro/currency commentary

    • 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.
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  • QCS Market Report February 2021 8 March 2021

    Sugar

    • The volatility in sugar price action followed that of macro sentiment, commodities and equities.
    • With very little fundamental news to hand, specs continue to push the market around following the macro environment.
    • The recently expired March 21 contract settled at 17.53 USc/lb.
    • Green Pool Commodity Specialists’ latest trade flows predict a small move from surplus to deficit through until Q4 2021.

    Macro/currency commentary

    • The reflation story helped lift the AUD to 24-month highs above USD 0.80 over the past month, before being evaporated in all but two sessions.
    • Firming equities and commodity prices were the narratives driving USD weakness.
    • Bond yields followed the same path as equities and commodities, though have been less talked about.
    • A breakout of key new highs sent traders into a flurry and the AUD lower.
    • The AUD may move higher again, given the current outlook for the economic recovery and positive local news.
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  • QCS market report 22 November 2019 22 November 2019

    Sugar

    • 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.
    • 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.

    Macro/currency commentary

    • A recovery in the AUD was short lived as local issues outweighed weakness in the USD
    • Trade uncertainty continues to weigh on the AUD.
    • The RBA remains in play, with the latest meeting minutes indicating a case could be made to reduce interest rates.
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  • QCS market report 14 October 2019 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 19 September 2019

    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 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 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 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 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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