Pool Update

Update as at 23 Jul 2020

The information and views expressed in this report are those of the writer and do not necessarily reflect the views of MSF
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
guaranteed. MSF Sugar does not accept any responsibility to any person for the decisions and actions taken by that person with respect
to any of the information contained in this report. The contents of this report are copyright to MSF Sugar. Any unauthorised use, copying
or other dissemination of this information shall be considered illegal and is strictly prohibited.

2019 Season Pool Prices (Pool valuation as at 15 July 2020)

2020 Season Pool Prices (Pool valuation as at 15 July 2020)

Forward Season Pool Prices (Pool valuation as at 15 July 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.


2019 Pool Report

2019 season pools have now been finalised with MSF’s default Late Season Pool wrapping up at $406.68/t IPS and the Shared Pool improving to just over $10/t IPS. The improvement in the MSF Shared Pool compared to 2018 ($-1.78/t IPS) was largely due to improvements in sugar premiums. The MSF Shared Pool alone adds an extra 75-92 cents per tonne to every tonne of cane delivered by all growers who marketed with MSF in 2019. For 2020 we expect this MSF Shared Pool result to more than double.

The stand-out pool of the year across MSF’s northern regions was again the Mulgrave Collective Pool which has been the best performing pool across Mulgrave, South Johnstone and the Tableland regions for 2017, 2018 and 2019 achieving $573, $490 and $450 per tonne actual respectively across those seasons. The Maryborough Collective in the South has not been far behind, achieving $536, $496 and $422 per tonne actual. Both of these collective pools receive good participation by growers from all areas and have helped those growers avoid the worst of the low sugar price environment we’ve operated in since mid-2017.

MSF Shared Pool

The MSF Shared Pool incorporates the incomes and expenses of MSF Marketing.The major items on the cost side are storage, handling, freight and insurance (shipping). On the income side the big items are polarisation premiums, physical sales premiums and US Quota income.

Most of these items are largely fixed except for the physical sales premiums which are negotiated by MSF Marketing and are influenced by regional supply and demand of sugar. When the Thai crop fell over in dramatic fashion early in 2020 the race for Far East Asian sugar importers to secure sugar supply was on. This pushed up physical sales premiums as buyers competed for limited raw sugar supply.

Major Headlines

  • The spot ICE#11 sugar contract continues to trade within its well defined range of 11.20-12.30 cents per pound where it has remained trapped since early June 2020.
  • Fundamentally not much has changed in the world of sugar lately. Brazil continues to power ahead without major stoppages for Covid-19 or congestion at Santos Port and India’s coming crop which was already looking big has been boosted by a strong monsoon that arrived early. Ultimately there is still too much sugar in the world and with most analysts forecasting world production above world consumption in 2020/2021 the pain looks set to continue.
  • There are a couple of bright spots on the fundamental horizon for sugar including the poor outlook for the Thai crop which is tipped at 70m tonnes of cane (compared to 75m tonnes last season) and the EU which is feeling the effects of a sugar beet disease.
  • Since the EU banned the use of neonicotinoids – insecticides blamed for killing bees – in 2018, farmers there have been hit by Beet Yellows Virus (sound familiar?) which is spread by aphids. The yellowing spreads through the leaves of the plant reducing the photosynthetic area, reducing sugar content and causing yield losses of up to 50 per cent. According to a recent Bloomberg article BYV could hit yields in France, Germany and Belgium by 25%, 30% and 50% respectively this coming harvest. France and Germany are the top two beet producers in the EU. Yields in France are forecast at their lowest level in 15 years and could get worse.
  • The speculative sector holds a small net long raw sugar position which is generally a positive indication for prices however there has not been much to prompt the specs to increase their buying or tip them into selling.
  • Recent macroeconomic positives for sugar include the continuing rebuild of oil prices with West Texas crude briefly surpassing $42/barrel this week, it’s strongest level since early March. This improves the returns for Brazilian ethanol however not by enough at this stage to prompt a swing back to ethanol production by sugar cane millers.
  • Also the Brazilian Real (BRL) has surged against the USD hitting a 5 week low of 5.08 which reduces returns for sugar in Brazil. Our Aussie dollar has done the same surging above 0.71 with the USD.