A run at 15 USc/lb was rejected this week as the market fell on lighter volume. The latest Commitment of Traders report shows spec positioning reduced as non-index funds reduced their net short position 35,000 lots (from 107,000 to 72,000 lots). Ethanol parity rose slightly over the week, whilst dryness and uneven rainfall in India caused some concern. The Indian government is considering another change to its import tariff, which may allow 300–500kt to be imported at 25 per cent of the duty. This potentially allows for another run above 15 USc/lb. This week, the latest UNICA report for 2H July is due out. With 1H July results better on a yearly basis, we expect much of the same for 2H.
Retracing lost ground, the USD has bounced back following a decent US payroll print on Friday night. Gradually weaker on the week, the AUD maintained a USD 0.7900 handle, despite a dip below 0.7900 following US payrolls. The RBA left rates on hold as expected, though explaining that a higher currency would see a slower pick up in economic activity and inflation going forward. Looking ahead, this week we see the China trade balance, CPI, PPI and US PPI and CPI as key global data drivers, with a quiet local calendar and RBA Governor Phil Lowe due to speak on Friday before a parliamentary committee. The Trump space will garner some traction this week if the US President pulls the trigger on trade tariffs with China.