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QCS market report July 2021 14 July 2021
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- Raw sugar futures seesawed this month as the July-21 contract expired and a lack of fresh fundamental inputs pushed the market around.
- Given the lack of fresh fundamental news, sugar market participants kept a keen eye on CS Brazil and its current crush.
- Sugar saw some follow-through weakness from the grain market last week and looks technically soft in the near term.
Macro/currency commentary
- AUD price action chopped lower over the last month.
- Key drivers for global markets appear to be the trajectory of rate hikes and tapering of quantitative easing programs around the world from the respective central banks.
- The AUD made a clear break from its painstaking USD 0.77– 0.80 range and looks set to face more downside pressure.
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QCS Market Report May 2021 19 May 2021
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- Raw sugar futures traded higher over a 200-point range in the last month, with the prompt Jul-21 contract making life-of-contract highs above 18 USc/lb.
- There is speculation about shortfalls in the Brazilian crop, after the latest UNICA report showed a slower crush in Brazil’s CS region.
- The Brazilian crop output will be the focus going forward, with possible changes in output, sugar mix and yield key drivers for prices.
Macro/currency commentary
- The AUD has chopped over a USD 0.7688 – 0.7889 range tin the past 30 days, as global reflation returns to the radar against strong commodity prices.
- Iron ore and oil prices have led the charge for commodity currencies this year, as demand heightens for natural resources.
- Locally, the RBA upgraded its forecast for employment and kept interest rates on hold.
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QCS Market Report April 2021 24 April 2021
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- 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.
Macro/currency commentary
- 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.
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QCS Market Report March 2021 30 March 2021
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- Since the expiry of the Mar–21 contract some weeks ago, the new prompt May–21 contract has traded sideways in the 15.50–16.50 USc/lb range.
- Fundamentally, there have been very few new inputs for the sugar market other than crop updates.
- Brazil remains the key focus for sugar prices going forward.
Macro/currency commentary
- The AUD pulled back nearly 4% of gains, which saw it trade above three-year highs at USD 0.80.
- However, price action since then has underwhelmed, with rising treasury yields, a drop in equities and concerns about higher inflation keeping the market at bay.
- Attempts to break USD 0.78 continue to be rejected with technical resistance and demand.
- Locally, the economic data flows and demand for natural resources continue to float the AUD and are key to providing forward guidance.
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QCS Market Report November 2019 2 December 2020
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- 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
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- 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
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- 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
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- 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
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- 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
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- 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.