A further downward bias was seen in raw sugar futures the past week. Prices fell another 100+ points, week on week. A continued speculative liquidation, uptick in production in India and headlines China were looking to offload 300 kmt of stock, highlighted the week. As expected, the latest Commitment of Traders report illustrated a 31,000 net long reduction to 155,000 lots. By market close tonight, we expect to have shrunk by at least another 20,000 lots. Last week, ISMA released a constructive outlook on the current crop, following reports that sugar production was ahead of the same time last year. Bears jumped at the opportunity to sell out of bad news as sugar softened further. The latest UNICA report high-lighted a keen interest by Brazilian Mills to continue to produce sugar over ethanol. Total production at the end of November sits around 34.7 million tons. While the rest of 2016 shows little signs of providing potential movers in the near term, we believe conditions could improve in to 1H 2017 as a result.
CURRENCY / MACRO COMMENTS:
A relatively quiet week for the AUD was interrupted by an unexpected hawkish FOMC. The FOMC revised their dot plots to indicate a further rate rise in 2017 above and beyond the 2 hikes previously expected. The USD strengthened dramatically as major crosses and the AUD all took a dive (AUD posting new 6 month lows). Key local employment data came in better than expected which helped stem the flow of AUD selling seen in the early hours of Thursday morning. Opening this week, the AUD softened on concerns for the AAA credit rating and mid-year budget review on Monday. Today we have the RBA meeting minutes which did little to concern AUD price action. We see US GDP and Durable Goods Orders later this week as key market drivers.