Pool Update

Update as at 7 August 2019

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2019 Season Pool Prices (Pool valuation as at 1 Aug 2019)

Forward Season Pool Prices (Pool valuation as at 1 Aug 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 with Terry Allom, MSF Sugar Commodity Services Manager

  • After an initial push higher to 12.30 the Oct 19 contract has given back most of the gains made off the 11.39 low seen a few weeks ago.
  • Whilst there has been a smattering of consumer demand and little to no producer selling, speculative market participants have been having their merry way with the #11. The speculative net short position is currently 147 k lots.
  • With Brazilian ethanol parity hovering around 14 cents it comes as no surprise that millers in Brazil continue to pump out as much of the fuel as they can. Whilst this could be termed as bullish the market has already factored in the reduced sugar output. Brazilian raw production is forecast at 26 million metric tonnes which is low by historical standards.
  • As we know the last Thai crop produced in excess of 14 m mt of sugar, we are hearing reports that a lot of the stock is unpriced and/or yet to be shipped.
  • Our Bangkok office believes that any near upward price movement will be met with a wave of Thai selling. Broker conversations indicate that scale up selling is evident from 12.25 upwards.
  • Longer term India hold the key to values. Whilst the start of the growing season was met by a poor monsoon it is starting to play catch up and put a base under production. Yes production will be lower than last year but they are still forecast to produce a surplus. Add this to their already bulging stock piles and India may need to export 5 million plus tonnes. The unknown is what support (subsidies) will be provided and in turn at what #11 levels is it viable for them to export.
  • Based on the existing Indian subsidy program we feel that values from 13.25 and above will see export flows.
  • Thankfully the AUD has come to the party trading down to 10 year lows. The impetus for the move lower was  not only the  US Federal Reserve decision to cut rates but the accompanying words of  Jerome Powell (US Fed Chair) that the cut should be seen mid-cycle adjustment. The market interpreted this as meaning there will not be as many cuts as originally expected.
  • And finally there is Donald v China. Donald continues to bate China via his twitter account announcing 10% tariff on all Chinese goods. It took a couple of days but China’s reply was to devalue their currency giving them a competitive advantage over the US. Who knows what comes next.