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Real Estate & Business

22 July, 2021

Pricing is strong

STRONG pricing and a collective of world economic drivers are singing a sweeter song for cane growers throughout the Mackay, Isaac, Whitsunday regions. The Oct21 ICE 11 raw sugar contract bounced off a low of 16.73 USc/ lb last Tuesday before trading up over 100 points to a high of 17.78 USc/lb on Friday, closing last week up 2.5 percent.


STRONG pricing and a collective of world economic drivers are singing a sweeter song for cane growers throughout the Mackay, Isaac, Whitsunday regions. The Oct21 ICE 11 raw sugar contract bounced off a low of 16.73 USc/ lb last Tuesday before trading up over 100 points to a high of 17.78 USc/lb on Friday, closing last week up 2.5 percent.

 Brazilian crop progress for the second half of June was released by UNICA (the Brazilian Sugarcane Industry Association) last Monday, with cane crush figures coming in above expectations due to quality production weeks in the Sao Paulo state. Cane harvested this season to date was reported to be 210.9 million tonnes compared to 230.4 million tonnes at the same time last year, with sugar produced at 12.3 million tonnes compared to 13.3 million tonnes in 2020. More cool weather is predicted for Brazil, spooking the market with fears of another frost that could damage the crop further.

 Longer term, the US Climate Prediction Center has reported that a La Nina pattern may appear again later this year, potentially bringing another year of poor rainfall for the Southern Brazil cane areas. The Indian Sugar Millers Association released its first estimate of the 2021/22 Season Indian crop at a forecast 31 million tonnes of sugar. This is virtually the same as their 2020/21 Season production but still lower than the market consensus. Just as ICE 11 sugar prices have been range bound for the past two months,  the net speculator position has followed a very similar pattern, trapped in a 185,000 – 250,000 lot net-long position.

The latest Commitment of Traders report dated 13 July reported specs reduced their position to 194,000 lots net long. Markets continued to trade in a risk-off tone last week as the US Dollar strengthened and the Aussie Dollar (AUD) underperformed after the extended Sydney lockdown was expanded to Melbourne. 

The AUD slipped from its high of 75.83 US cents last Tuesday down to a low on Friday of 73.92 the net speculator position has followed a very similar pattern, trapped in a 185,000 – 250,000 lot net-long position. The latest Commitment of Traders report dated 13 July reported specs reduced their position to 194,000 lots net long. Markets continued to trade in a risk-off tone last week as the US Dollar strengthened and the Aussie Dollar (AUD) underperformed after the extended Sydney lockdown was expanded to Melbourne. The AUD slipped from its high of 75.83 US cents last Tuesday down to a low on Friday of 73.92 US cents. 

For the third month in a row, the US consumer price index (CPI) was much higher than expected, printing at 0.9 percent month on month – more than double the market consensus. Almost half of this figure can be attributed to a 10.5 percent month-on month increase in used car prices which are now statistically 45 percent higher than at this point last year. Despite the US Fed continuously reassuring that this inflation is only transitory and is expected, markets remain fearful that it could be more enduring and lead to an earlier interest rate hike.  


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