Regardless of how far or stretched the market may be, raw sugar futures have continued to slide over the past week. Very little price positive news, other than the hope for a significant weather event. The supposed floor provided by ethanol parity, a distant memory given how far we have come. We remain wary of a large commercial short position which would see a wave of selling if the market were to bounce. The Jul17 contract is due to roll off this week. Open interest sits 39 per cent above May17 expiry suggesting another huge delivery.
A rather quiet week for the AUD, trading over a 100pt range. Despite a lacklustre tone, the AUD managed to finish on the front foot back toward USD 0.7600. The AUD seems to have found a base in the USD 0.7550–0.7650 range, with decent support and resistance. Many have questioned whether the Fed can continue to hike at the heightened rate they propose and trim down their balance sheet at the same time. Price action would suggest not as the USD and yields continue to struggle.
Chart Sources: Bloomberg