Pool Update

Update as at 7 February 2020

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2019 Season Pool Prices (Pool valuation as at 30 Jan 2020)

Forward Season Pool Prices (Pool valuation as at 30 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 in the new year with the spot contract briefly breaching 15 cents per pound.
  • The situation for the Thai industry continues to deteriorate with crop estimates downgraded to 70-85 million tonnes of cane, compared to 133 mt tonnes in 2018/19 season. This is the driving force for the sugar market’s improvement in 2020 (along with India’s smaller crop). 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 common in India’s largest sugar producing state Uttar Pradesh. The 2021 forward price has traded either side of $450 recently, getting as high at $455.
  • Can the market continue on it’s upward trajectory, yes if the speculators continue to buy and the Thai crop gets worse. Fundamentally most analysts now expect a global sugar production deficit of around 6-10 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 0.6700 with the USD.