2 July 2019
Indicative ICE 11 Prices
2019 – 406.29
2020 – 430.87
2021 – 438.08
*These figures are indicative of available ICE 11 prices as at 1 July 2019 and reflect the weighted average AUD/mt price. The prices have been adjusted to include Over-the-Counter margin fees charged by banking institutions and so may differ from daily prices quoted by the ICE #11 Exchange and/or other Marketers of Growers’ Economic Interest in Sugar. Values also do not account for any adjustments resulting from local Grower-Miller pricing arrangements.
Weekly Market Overview
By QSL Trading Analyst Barbara Roberts
SUGAR
We can officially say goodbye to July19 and welcome October19 as the new prompt contract. Expiry week was busy and volatile, with prices swinging wildly. This can be seen in the ICE 11 price chart below.
• Deliveries were reported at a near record 2 million tonnes of sugar. The biggest surprise was finding 1.1 million tonnes of Brazilian sugar delivered to the tape, when Brazil has been running the highest mix of ethanol for the past 18 months.
o Delivered to the tape?: Buyers and Sellers of ICE 11 sugar futures contracts have until the last day to close out their contract positions on the market. Any buyers/sellers that hold open positions after the final trading session are obliged under the standard terms of the futures contract to deliver or accept delivery of physical sugar and receive/pay the agreed price for the physical commodity.
• 251 mills are currently operating in Brazil. The crush rate is some 7 million tonnes of cane behind last year. Nine mills are about to start their operations over the following weeks which should close the gap.
• Rainfall just before harvest appears to have compromised the sugar content in the cane, currently 4.04% lower than last year.
• 30% of total cane production has been processed which indicates that almost 800.000 tonnes have been already channeled for ethanol production.
Crude Oil: At the G20 meeting, Russia and Saudi Arabia agreed to extend oil production cuts for another 6 to 9 months to support crude oil prices. The crude oil price is currently trading around $59 per barrel.
Commitment of Traders*: Specs movements for this reporting period were somewhat of a surprise given price action, their net short position of the Non-Index was down from 100,000 to 84,000 lots.
*Commodity Futures Trading Commission (CFTC) help the public to understand market dynamics. COT provides a breakdown report every Tuesday’s open interest for futures and options on futures markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. (www.cftc.gov)
CURRENCY
As shown in the chart below, the Aussie Dollar (AUD) held strong for another week. Ongoing weakness in the United States Dollar (USD) and the market mood being slightly risk positive supported the AUD to trade over the 0.70c handle.
• US and China Ceasefire: The much anticipated meeting between US President Donald Trump and Chinese President Xi Jinping took place on Saturday at the G20 summit in Japan. As expected by most, a deal was not finalised. However, agreements from both sides to halt planned tariff increases were enough to lift the market sentiment slightly.
• RBA Rate Cut in July: As expected by the majority of economists, the RBA cut the cash rate by 0.4%, and now we have a new record low of 1%. Current data supported immediate action, and as Governor Lowe has reiterated in a numerous speeches, the cash rate is important to support further reduction in the unemployment rate.
• Aussie data to be released this week and what to expect:
o Building Approvals will provide performance on the housing market.
o Trade Balance is expected to be strong as Iron Ore retains strong value.
For more sugar market information, please read the latest QSL Market Snapshot, available here.
This report contains information of a general or summary nature. While all care is taken in the preparation of this report, the reliability, accuracy or completeness of the information provided in the document is not guaranteed. The update on marketing and pricing activity does not constitute financial, investment or product advice or a risk management strategy. You should seek your own financial advice. Nothing contained in this report should be relied upon as a representation as to future matters. Information about past performance is not an indication of future performance. QSL 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. You have received this email as you are subscribed to receive newsletters and other marketing material from QSL. We take your privacy very seriously. View our Privacy Statement on QSL’s website. When you make enquiries of QSL or sign up for QSL news or information, you thereby consent to QSL collecting and using the personal information that you provide to QSL in the operation of QSL’s business, which may include direct marketing. You may opt out of this service at any time if you no longer wish to receive any communications from us by using the unsubscribe function at the bottom of this email.
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