20 June 2017

Weekly Market Report 20 June 2017


A continuance of spec selling has continued to drag raw sugar futures lower over the last week. Trading heavily, underhedged commercials, better than expected UNICA results and another price cut by Petrobras helped drive the market lower. Ethanol parity is now below 13 USc/lb and with a gloomy fundamental backdrop, any upside lift may remain limited. In contrary, wet weather in Brazil and/or a failed monsoon in India could provide the market with a correction. However the heavy nature of recent trading suggests upside may be limited. Looking ahead, we have the Jul-17 expiry in two weeks which will give insight into the physical movements ahead.


A choppy week for the AUD making fresh two-month highs above USD 0.76. Price action heated up ahead of the FOMC meeting as soft US CPI and retail sales gave the AUD an early leg up. The FOMC hiked rates (0.25 per cent) as expected, leaving dot plot projections unchanged. The Fed remain on track for another rate hike this year and three next. Local employment came in better than expected as unemployment fell to 5.5 per cent. Gains made on weaker US data on Friday have since been retraced as Moody’s cut the credit rating of the Big Four Australian banks overnight. Today we have the RBA minutes, which are expected to reinforce the RBA’s neutral tone going forward.

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