Update as at 19 June 2019
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2018 Season Pool Prices (Pool valuation as at 13 June 2019)
2019 Season Pool Prices (Pool valuation as at 13 June 2019)
Forward Season Pool Prices (Pool valuation as at 13 June 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 has steadied above 12.50 cents per pound over the past week however heavy producer selling from around the 12.80c/lb mark has meant it’s been unable to push higher.
- Brazil’s sugar industry group UNICA released crush results for second half of May this week. Millers turned 35.4% of cane to sugar production over those two weeks with the rest to ethanol which is largely in line with expectations.
- Ethanol parity is currently estimated to be between 13 and 13.5 c/lb. The July and October raw sugar contracts for 2019 are currently 12.61 and12.83 c/lb respectively. What this means is that any further substantive rally in 2019 sugar prices would prompt Brazilian millers to increase sugar production. As Brazil progresses through their crushing season the ability of millers to switch between sugar and ethanol diminishes. Theoretically sugar prices could move beyond ethanol parity later in the year without prompting extra sugar production from Brazil.
- Thailand still has plenty of sugar to sell from it’s 2018/2019 crush, prices approaching 13 c/lb begin to look attractive for Thai millers which will impede moves higher for raw sugar prices until last seasons stock is cleaned out.
- Production in the key Indian state of Maharastra is expected to fall 39.2% (from 10.7mt of sugar to 6.5mt) year on year in 2019/20 because of a drought hit crop according to the Maharastra sugar commissioner. Area under cane has fallen 28% compared to last year after rainfall was down 23% during last year’s monsoon (June-September). Inventories remain high however this may alleviate some of the pressure on India to export. One dealer said the government may set export targets for the year commencing 1 Oct 2019 below 5mt which would be below previous export targets.
- The AUD/USD has found lower ground breaking through the 0.69 handle to be around 0.687 at time of writing. Unemployment remains above expectations in Australia and regionally economic data out of China has been weak which is forcing the AUD lower against the greenback and most other currencies.
- “The Australian May labour market data reinforce our view that the RBA will cut the cash rate again in August to 1.00%. Downward pressure will remain on AUD for now, despite the equal risk of (US) Fed rate cuts,” says Kim Mundy, a strategist at Commonwealth Bank of Australia.