18 April 2014

Weekly Market Report 18 April 2014


Sugar futures remained in choppy, sideways trading in a holiday shortened trading week, with little market news to speak of. This lack of news appears to be captivating market participants, with many believing prices will remain in the recent price range until something ‘new’ comes to light. May-14 options expired early last week, with little to write about. The May-14 futures contract expires next week, and all eyes are on the potential delivery to determine if there is in fact physical demand in existence at the moment or not. A large delivery against futures suggests traders and marketers are finding it hard to find homes for their sugar. The spread between May and July also showed significant volatility last week, and is currently paying handsomely for sugar to be ‘carried’ to the July contract. Recent cyclone activity in Queensland has made headlines, with some bold predictions on possible losses. The market however appears to be taking the Aussie situation in its stride, with little in the way of demand surfacing due to reports of lodged and damaged cane.


Currency markets had a period of consolidation last week, with the AUD/USD trading sideways to slightly lower. The Aussie closed the week at ~0.9330, well off the highs of the previous week that were reached following supportive labour market data here. Market talk appears to be shifting back to a slightly negative bias on the AUD/USD, however it is proving rather sticky at current levels, and for the most part, appears to be somewhere near the middle of the range that has been in place for the past six months or so. Focus this week is likely to be on the CPI numbers due out on Wednesday and the Chinese PMI data out that day as well, however we once again have a holiday-shortened trading period with ANZAC Day this Friday. Local interest rate markets have priced in a likely rise in interest rates here around the middle of 2015, however some commentators have begun to speculate that the RBA may be forced to move earlier, particularly if inflation numbers continue to show strong price rises.