Pool Update

Update as at 17 January 2020

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2019 Season Pool Prices (Pool valuation as at 9 Jan 2020)

Forward Season Pool Prices (Pool valuation as at 9 Jan 2020)


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

  • After spending most of December and the holiday period trading either side of 13.50 cents per pound, sugar has surged over the past week trading as high as 14.58.
  • Short-term supply and demand dynamics in Asia seem to be behind the market’s improvement as the Thai industry digests the idea that they may crush 40 million tonnes of cane less than last season (from 133 down to 93 million tonnes). This coupled with an historically high import program announced by Indonesia and increased demand from China has pushed near-by contracts higher.
  • The price improvements have not been as pronounced in further out contracts (2021 season) with the market expecting India to bounce back with a big crop commencing November 2020 after monsoon rains filled most of the key cane growing area’s water storage’s late in 2019. Irrigation is no longer uncommon in India.
  • Can the market continue on it’s upward trajectory, yes if the speculators continue to buy. Fundamentally most analysts now expect a global sugar production deficit of around 10 million tonnes for 2020 which will put a dent in what were historically very high global sugar stock levels.
  • Brazil looms as the obvious threat to the current market improvement. Ethanol parity is now between 15-16 cents per pound. Closer to the commencement of their harvest in April/May Brazilian millers will reassess the value and prospects for ethanol and plan how much of the bio fuel they will produce with regards to sugar. If oil prices drop or sugar prices push higher it’s hard to imagine Brazilian millers will not swing at least some cane back to sugar production. Last year Brazil used 35% of cane for sugar production and 65% for ethanol. For every 1% of cane switched from ethanol to sugar produces 760,000 tonnes of raw sugar…
  • The Aussie dollar has been stable, trading around 0.6900 with the USD this week.