A weak-kneed run in to expiry saw March-17 fall 169 points. Rolling off the board at 19.31 USc/lb, expiry was highlighted by a single receiver of 1.2 million tonnes. Prices appear to have stabilized overnight, prompt May-17 bouncing off back into positive territory. With March-17 expiry out of the way, attention returns the fundamental backdrop – India, China and Brazil – hanging over the market. A mixed start for Brazil saw latest UNICA report showing 127 kmt production at the end of February – preliminary estimates seeing the crop at 35.5mmt. In India, Government has announced that they will only make a decision on actions going forward at the end of March. This supports common views that Indian import requirements will manifest in whites vs raws, the longer it is dragged out. As trade flow outlooks remain dim, Chinese stock releases continue to pop up as a formidable solution. The common question of how much and how fast Government is willing to release them is a separate issue.
Looking ahead, we maintain a neutral view for raw sugar futures.18–21 USc/lb range makes sense, with strong weakness below 22 cents.
A constructive end to the week saw the AUD through 77 cents, before retracing gains made in the following session. The AUD firm through the 0.7650 – 0.7750 range. Last week we saw the RBA minutes which provided little in the form of new information. RBA Governor Lowe spoke later reiterating a neutral stance on policy as long as labour market conditions were as expected. A lack of hawkishness in the FOMC minutes fuelled the AUD gains above 77 cents. This week we have seen mixed local data, as Q4 GDP came in better than expected. And local trade balances weaker than expected. Tonight we have manufacturing PMI in the US, which may create some market volatility given the lack of data this week.