Pool Update

Update as at 31 October 2019

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Sugar. While all care is taken in the preparation of this report the reliability or accuracy of the information provided in the document is not
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2019 Season Pool Prices (Pool valuation as at 31 Oct 26 2019)

Forward Season Pool Prices (Pool valuation as at 31 Oct 2019)


Net AUD/T (IPS) subject to change with changes in the ICE 11 market price affecting unpriced exposures, movement in the AUD/USD exchange rate and also due to  movements in the Shared Pool.


Major Headlines

  • Sugar experienced a rally early in October following the expiry of the Oct-19 contract. The new spot contract Mar-20 climbed to almost 13 c/lb before stalling as the market encountered significant producer selling from the usual suspects: Brazil and Thailand. These waves of selling were enough to soak up the speculative buying and the rally ran out of puff.
  • The Indian government says India has 14.2 million tonnes of sugar in storage as at 1 Oct 2019. Indian mills are aggressively selling old season sugar to Iran following the announcement of subsidies by the Indian government some time ago.
  • Tehran is trying to secure food supplies under US sanctions which block it from the global financial system including U.S. dollars to transact its oil sales. Iran agreed to sell oil to India in exchange for rupees but it can only use those rupees to buy Indian goods, mainly items it cannot produce enough of domestically – sugar as one example.
  • Thailand will commence its new crushing season in the second week of December, two weeks later than normal. The delay is a strategic one to capitalise on late cane growth following an underwhelming growing season characterised by an extended period of below average rainfall followed by a late burst of flooding rain. Despite the delayed start cane tonnage is expected to be down on past years. How far down is difficult to accurately forecast given the unorganised nature of some areas of the Thai industry.
  • Whilst the market continues to forecast the world is heading for a sugar deficit in 2020 it remains a theoretical deficit. There will be more than enough cane harvested in Brazil next year to wipe or reduce the deficit if the ICE #11 incentivizes that country to return focus to raw sugar production from ethanol. What does that mean? If sugar prices rally beyond 13.50-14 c/lb Brazil will make more sugar next season which will not aid in reducing global sugar stocks.
  • MSF’s 2020 forward sugar price peaked in the mid $430s during first half October. Since that time it’s dipped to around $410/t today.
  • The Australian dollar strengthened late in the week following the release of somewhat positive employment data which prompted market analysts to defer or abandon their forecasts for another interest rate cut by the RBA in December.