Softening over the week, raw sugar futures opened at the high before closing below the 14-USc/lb handle sustained in the last month. Soon to expire, the Oct17 contract was the biggest loser, down nearly 4 per cent on the week. Price action was highlighted by an erosion of the last two weeks’ gains on Tuesday. Presumed speculative selling out of recent long positions were largely credited to the move lower. The latest Commitment of Traders report saw another reduction of some 18,000 lots to 73,500 lots net short. Looking ahead, China begins to auction off reserves this week while a supposed $100 subsidy on exports has been approved in Pakistan. The EU sugar regime kicks off in the coming week as white premiums continue to struggle. As we near the October17 expiry this week, our focus will turn to the most active March18 contract.
Further clarity around the Fed’s balance sheet normalisation stalled AUD strength this week. The Fed mentioned that balance sheet normalisation can be expected to kick off in October this year, maintaining its earlier forecasts. The AUD was rejected above USD 0.81 and eventually closed lower. A relatively quiet week ahead on the data front, with a range of Fed and RBA speakers due before we see key China manufacturing PMIs on Friday. Given very little on the data front, expect the AUD to sit tight in the current AUD 0.79 – 0.80 range this week.