The solid run higher has certainly stalled and the market is marking time (in a very corrective phase) wai ng for the catalyst for the next move. The market has sold 200 points lower from 21c to 19c with basically zero change in the speculative long. Whether they chose to start liquidating positions if the market was to push lower will be key. The fact they have watched a 200 point fall and not been cutting positions suggests they are still comfortable with the longer-term outlook.
The previously mentioned benign weather for both Asia and Brazil has continued. The harvest is back in full swing in CS Brazil and the market is already beginning to upgrade its forecasts for the prospective Indian and Thai crops. There is, however, quite a divergence in the thinking of how much repair the rain has been able to do in Asia.
Curve shape : a very important point to remember for growers looking to hedge future seasons is the shape of the curve. Whilst there is plenty of commentary so suggest the market will see as high as 25 or even 30c going forward, this will likely be at the front of the curve only. Additional supply in Asia and Europe is anticipated in future seasons as a return to more normal weather, increased husbandry and increase in yields takes hold. This is why current season is $548/t and 2018 is $475/t
For all the noise and bluster, currency markets have generally been going sideways for the past few weeks, with GBP being the clear exception to the rule. Following the Brexit vote, GBP/USD has gapped lower to 1.35 and continued to push lower, currently 1.31. A move down to 1.20 is envisaged in the not-too-distant future.
AUD/USD is in the middle of the 7200/7800 range we have been in since February. As mentioned previously, the July 27th CPI will be the key to the next RBA decision on 2ng August.
A weaker number (now expected by a number of market participants) will open the door for the RBA to lower interest rates.
Other commodities are also range bound with both oil and iron ore trying for new highs and ultimately being unable to continue to move. The safe-haven bid gold, found for Brexit, has been somewhat unwound too.