Pool Update

Update as at 2 April 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
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2019 Season Pool Prices (Pool valuation as at 26 Mar 2020)

Forward Season Pool Prices (Pool valuation as at 26 Mar 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

  • A lot can change in a month! At the beginning of March the May-20 futures contract traded to a high of 14.40 cents per pound. Last night the same contract traded to a low of 10.02 cents per pound, the weakest the spot contract has been since August 2018 when it briefly dipped below 10 c/lb.
  • Where are we headed? At this point in time there are many unknowns given the ongoing development of the Covid-19 pandemic however a couple of schools of thought exist with respect to the immediate future of the price of sugar and they hinge on Brazil. Forecast 1. The current Brazilian harvest (which commenced April 1) is disrupted by the virus, restricting global supply and sugar prices rally. Forecast 2. The virus does not disrupt the Brazilian harvest, Brazil produces ample sugar and prices remain depressed for the foreseeable future.
  • Brazil’s cases of caronavirus now exceed 6,000, the Brazilian health minister says their healthcare system will resemble Italy’s by end of April and the rate of new infections will not decline until September. Brazil is the only country with a population of over 100 million that provides universal healthcare to it’s people. At this point in time the Brazilian President refuses to back social distancing measures to reduce the spread of the virus and is insisting that Brazilians must not down tools during this crisis for fear of the country suffering the same fate as neighbouring Venezuela.
  • Brazilian millers are expected to use 42-45% of their cane throughput to produce 32-35 million tonnes of sugar this year. Last year they turned 34.5% of cane to sugar production to produce more like 26m tonnes. The swing back to sugar production is in response to the halving of global oil prices since January 2020. As it stands today, fuel (ethanol) demand in Brazil has halved as businesses slow, Brazil’s two major fuel retailers have advised sugarcane millers that they cannot continue to take delivery of ethanol as they cannot sell it at the rate it’s delivered and storages are full.
  • Given the above information there are arguments being made both ways with regard to the immediate future of the sugar price. Time will tell!
  • The AUD is currently trading around 0.60 with the USD.