A shortened trading week did little to affect a continued rally in the front March-17 contract. Covering a 160 point range, March-17 traded from an early week low at 19.58 to post fresh 2 month highs of 21.18 USc/lb. News of delays to the Thai crop, continued reduction estimates for Indian and speculative buying, presumably led sugar higher. The latest Commitment of Traders report confirmed assumptions, that specs were mixed buyers and sellers of sugar this week. Net buying prevailing as new money saw specs adding 19,000 lots to a net long 150,000. Whilst the jury is out on a reduced Indian crop, the focus shifts to how much sugar they import in 2017? In Thailand, a delayed start due to logistical issues will be sure to impact overall production. Intuitively, as prices continue to track higher we feel prices normalizing in the 20–21 cent range, until further news on Indian imports is clear.
CURRENCY / MACRO COMMENTS :
A constructive week for the AUD, breaking recent resistance levels to trade back towards the 73 cent level seen before Christmas. Key drivers drove solid moves in the AUD, as the FOMC December meeting minutes and US non-farm payrolls highlighted. Mention of a stronger USD underpinning inflation saw the AUD trade up to the week high 0.7356. Supported by a soft non-farm payrolls print on Friday night, the AUD maintained a 73 cent handle heading into the weekend. Looking ahead, we have some key trade data, CPI and PPI in the US and China. We have little data due locally, retail sales (Tuesday) offering potential price action. Failing twice at 0.7350 another test of this level will be expected this week.