Raw sugar futures staged a recovery over the holiday period as a mixture of new money and fundamental uncertainty drove prices above 21 USc/lb. A strong India theme highlighted price action as concerns for early mill closures in Maharashtra supported the change in sentiment. In spite of a better than expected Brazilian crop, analysts remain of the view that supply will remain tight for 2017. Chinese stock releases are expected (albeit, very slowly) to fill the potential absence of Indian sugar. With the lack of previous fundamental news, the New Year looks set to provide the market with fresh fundamental impetus. The risk for sugar remains on the upside as fundamental concerns partnered with speculative input maintains a bullish tone.
CURRENCY / MACRO COMMENTS :
A better than expected start to 2017 has seen the AUD open the year with renewed strength. Trading from a 7 month low nearing 71 cents, the AUD has firmed on a loss of USD momentum and waning in the Trump honeymoon. Markets had mixed reactions to the latest Trump speech, which failed to provide guidance on his proposed fiscal policies and tax cuts. The upcoming Brexit has market watchers con-cerned over a ‘hard Brexit exit’ which the UK’s trading relationship with the EU will come under scrutiny. Looking ahead, the Trump story will maintain much if not all the markets attention. Expectations for his inauguration will see an increase in volatility and a 2–3 cent move either side of 75 cents.