Update as at 21 February 2019
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.
2018 Season Pool Prices (Pool valuation as at 14 February 2019)
Forward Season Pool Prices (Pool valuation as at 14 February 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 – Terry Allom, MSF’s Commodity Services Manager
Whilst there have been no major changes to the long term fundamentals (we still have huge stocks) it seems the system traders , think fast car driving people, found comfort in concerns on the size of the upcoming Indian crop and news that a number of the beet mills in Europe are being taken off line. On the India front reports are filtering through that the persistent dry weather in certain districts is taking its toll and that the crop maybe below 30 mmt. History has taught us that we should take any news coming out of India (particularly if it has come from a miller who maybe sitting on a large stockpile) with a grain of salt as there has been a gulf between words and actuals over recent years. More concerning is the slated shut downs in Europe with some key beet processors mothballing factories in the face of low prices and poor yields.
On the Marco front oil values remain well supported and its associated influence on ethanol values are for my mind the major contributor behind the recent rally. The oil and #11 correlation is strong meaning that any movement in oil should translate into a directional move in ethanol and by default sugar. The currency influences are also present with stronger commodity currencies such as the AUD (up 1 cent on the week) also supporting values.
Looking forward the near term values I believe will be at the mercy of the smart money i.e the speculators, funds and box traders (computers). If it is indeed this section of the market that is driving prices higher then it is near impossible to anticipate what, when and from what values a reversal will occur. What we notice is when they do move the market, reaction is usually very swift and harsh. Trying to pick such market dynamics is truly a mugs game.
Lastly the improvement in values has extended to the forward season and we are encroaching on A$ 450/mt which is around the 10 year average. There has been some grower hedging activity around this level over the past week.