Pool Update

Update as at 15 August 2018

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
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2017 Season Pool Prices (Pool valuation as at 9 Aug 2018)

2018 Season Pool Prices (Pool valuation as at 9 August 2018)

Forward Season Pool Prices (Pool valuation as at 9 August 2018)

 

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.

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Major Headlines

  • Sugar prices have moved lower over the past week with the OCT18 contract hitting a new life of contract low of 10.21c/lb during Monday’s session. The OCT18 contract settled Tuesday’s session at 10.34c/lb which converts to a sugar price of about $315/mt. Combining this sugar price with CCS of 12 equates to a cane price of less than $22 per tonne excluding the constant.
  • The weakness seems to have been driven by a number of factors including a strong US dollar, lack of demand for Brazilian raws, continuing record ethanol production and the coming of some rain to Brazil and Europe.
  • The reason for reduced demand for Brazilian raw sugar remains a point conjecture with some claiming it is an accident of timing and others that it is the result of waning global demand for sugar. Key sugar importers Bangladesh and Indonesia have been absent from the market in recent times for non-sugar reasons.
  • Ethanol production in CS Brazil remains very high however the current low price of sugar will be doing little to prompt a switch back to sugar production. The end of the Brazilian crop is approaching from which point ethanol prices will recover.
  • The logistical possibility of huge Indian exports over the coming year remain in doubt with the country ill-equipped to efficiently transport and export sugar in bulk. The Indian crop beginning October 1 2018 is expected to be bigger than the previous, producing 32-34m tonnes of sugar. At best it seems exports could total around 4m tonnes per year.
  • The AUD weakened against the USD over the weekend trading as low as 0.7257, the lowest since December 2016. Investors are dumping perceived risk sensitive currencies such as the AUD in favour of the safety of the US Dollar and Japanese Yen as Trump’s trade war turns to Turkey.