Monday, 01 February 2010
The ICE No.11 March 2010 raw sugar futures contract resumed its push higher during the review period (20th January 2010 - 1st February 2010), testing US 30 c/lb. The March 2010 contract traded in a range of US 27.30 c/lb to 30.33 c/lb, finishing the fortnight at US29.90, near the contract high.
In violation of its WTO export commitments, the European Commission announced it would allow an increase in sugar exports, 500kt surplus of out-of-quota sugar. The market impact was immediate, sugar prices both raw and white fell US$22/t. The market impact of he announcement was quickly overtaken by other events:
- estimates of the Thai cane crop have fallen by 6 mln tonnes to an expected 69 mln tonnes of cane, reducing both sugar production and export estimates;
- news of an orange rust infestation is casting questions over the size of the 2010 CS-Brazil crop recovery even before the 2009-10 harvest concludes;
- an Indonesian tender for white sugar imports was left unfilled;
- the Philippines has an emerging import need; and
- the USDA is expected to announce an increase in the US import quota later this month.
The Australian dollar (AUD) traded between 0.8789 and 0.9243 this review period, before closing the fortnight at AUD/USD 0.8820. The USD strengthened on perceptions that US economic performance may have reached a turning point and emerging concerns about EU economic performance. The lower AUD, is a reflection of the strengthening USD.
QSL's indicative prices for both the Aggressive and Seasonal Pools for the 2009 season remain strong, both pools are likely to deliver net prices exceeding AUD500/t. The weaker dollar and underlying sugar market strength support a continued very positive outlook for the 2010 seasonal pool.