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QSL Market Update – 16 March 2022

Raw sugar prices

RAW sugar prices last week experienced broader global economic volatility from the ongoing Russian invasion of Ukraine. However, the ICE 11 market was supported by rising oil prices and ethanol parity. The prompt May 2022 contract traded from a high of 19.89 USc/lb on the Monday down to a low on Friday of 18.87 USc/lb, before closing the week at 19.24 USc/lb.

Ethanol parity/Brazil: Petrobras (the largest petroleum company in Brazil) finally caved under the pressure of rising global oil prices and raised gasoline prices by 18.9% and diesel by 24.9% at Brazilian pumps. The news provided some strength to the ICE 11 market, with hydrous ethanol parity rising approximately 2.5c to 19.10 USc/lb equivalent.

India: The 2021/22 season Indian harvest is reportedly progressing strongly and now has the potential to break records if harvesting conditions remain favourable. In the second two weeks of February, 3.2 million tonnes of sugar were produced, up 7% on the same time period last year, which brings the accumulated season to date total to 25.3 million tonnes, potentially pushing exports as high as 8 million tonnes.

Commitment of Traders (speculator activity): Speculators have taken the ongoing war in Ukraine as a sign to allocate further capital into commodities, with the net-long position in sugar increasing by a substantial 82,000 lots. The commitment of traders report dated 8 March shows speculators holding a 139,000-lot net-long position.


The Australian Dollar (AUD) experienced further volatility last week as fluctuating risk sentiment from the ongoing invasion of Ukraine made markets jumpy. The AUD traded to a high of 74.35 US cents on Monday before falling rapidly to a low of 72.46 US cents on Wednesday morning.

Oil: Oil prices continued to strengthen early in the week after US President Joe Biden announced the US would ban imports of Russian energy, which will likely cause major supply headaches. The Australian Dollar was well supported by the rising oil prices as Brent Crude oil reached a high of $US139.13/barrel before closing the week at $US112.67/b. West Texas Intermediate (WTI) oil peaked at $US130.50/b before settling at US$109.33/b.

US Data: The headline Consumer Price Index (CPI) data release came in as expected at +0.8% month-on-month and +7.9% year-on-year, showing inflation is still running hot in the US economy. The 40-year high inflation level was driven mainly by higher gasoline, food and shelter costs in February and is likely to accelerate even further in March due to the impacts of Russia’s invasion of Ukraine. This adds further evidence to suggest we may see consecutive interest rate rises from the Federal Open Market Committee (FOMC) in the coming months.

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

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