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QSL Market Update -16 November 2021

The ICE 11 contract is the world benchmark contract for raw sugar trading. These figures are indicative of available ICE 11 raw sugar prices as at the week ending 16 November 2021 and reflect the weighted average Australian Dollar/tonne 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 or other marketers of Growers’ Economic Interest in Sugar. Values also do not account for any adjustments resulting from local Grower-Miller pricing arrangements.  

Raw Sugar prices

• Raw sugar prices gained enough momentum last week to penetrate the 20 USc/lb level for the first time in over a month, supported by a lower sugar mix in the final stages of the Brazil harvest as ethanol provides a higher return of 20.39 USc/lb equivalent. The March 2022 ICE 11 contract traded to a weekly low on Wednesday of 19.52 USc/lb and a high on Friday of 20.17 USc/lb before closing the week up 0.4% at 20.01 USc/lb.

• The second half of October UNICA (Brazilian Sugarcane Industry Association) report was released mid-week, revealing 128 Brazilian mills had closed by 31 October with another 87 expected to shut down by mid-November, leaving only 47 operational beyond then. During the 2-week reporting period, 17 million tonnes of cane and 858,000 tonnes of sugar were harvested and milled, while the sugar mix fell even lower to 37.04%. Total accumulated cane harvested and sugar produced for the season now stands at 504.4 million tonnes and 31.2 million tonnes respectively, which indicates the final crop figure is likely to be approximately 31.8 million tonnes of sugar at the end of the season.

• The Indian government is reported to have raised the price of ethanol paid to mills to ensure that a sufficient amount of cane is diverted away from sugar production. This decision is likely to be a reaction to sustained high ICE 11 prices as well as longer-term commitment from the Indian Government to increase the supply of ethanol given its target of 20% ethanol blending in petrol (also known as E20) by 2025.

 • The latest Commitment of Traders report, dated 9 November, disclosed a 174,000 lot net-long position held by speculators. This was an increase of over 11,000 lots and a new monthly high level which could be viewed as positive sentiment towards the ICE 11 market by speculators.


• The Australian Dollar (AUD) softened last week, led by poor local labour force data as well as further risk-off sentiment from US inflation concerns. The AUD traded from highs on the Tuesday of 74.31 US cents down to a low of 72.78 US cents on the Friday.• The October Australian labour force survey surprised markets by reporting unemployment falling by 46,000 jobs against an expected increase, as well as unemployment rising from 4.6% to 5.2%. To note, the majority of the decline in employment was a result of stay-at-home orders in Victoria and is likely to bounce back substantially in the next monthly report, given the easing of restrictions around Australia. • In the United States, the October Consumer Price Index accelerated faster than market expectations by printing a 0.9% change against forecast 0.6%. On a year-on-year basis, CPI is now at levels not seen since December 1990 at 6.2%. These rapid increases in inflation challenge the Fed’s belief that it is transitory in nature only and could escalate the pressure to raise interest rates sooner rather than later. Commentary on this data from the Fed will be closely monitored by the market. • Market sentiment received a slight boost on news that Chinese property developer Evergrande made coupon payments worth $148.1 million on 2 USD bondholders just before the 30-day grace period.


This is a whole-of-season ICE 11 price chart for the 2021 Season, current as of 16 November 2021, based on the current 5:1 pricing ratio applicable to QSL Target Price Contract growers. Source: Bloomberg

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 advice. 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.

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