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QSL Market Update 19 January 2022

Raw Sugar prices

Overview: The prompt March 2022 ICE 11 contract has recovered slightly after its major sell-off over the Christmas break. The contract traded to a high of 18.47 USc/lb on Wednesday, down to a low of 17.94 USc/lb on Thursday, before closing the week at 18.31 USc/lb.

• Brazil: Petrobras (Brazilian multinational corporation in the petroleum industry) has raised the price of gasoline in Brazil from 3.09 to 3.24 BRL/L (Brazilian real per litre), which could potentially drag ethanol prices higher. Most reports are indicating good rain in many parts of CS Brazil (Centre South Brazil), however uncertainty still remains in the south of CS where rain has been inconsistent and the quality of the crop may vary due to last year’s drought, frosts and fires in the region.

Oil: The overall outlook for global oil markets has improved with oil currently above $US81 per barrel, despite the current geopolitical tensions between the US and Russia over Ukraine.

• White premium: Refining premiums have strengthened over the past couple of months reaching $US98 per tonne last week. The margin has been increasing since October 2021, when the price was around $US53 per tonne. This increase is likely to be an adjustment in the price to cover refiners’ costs in a period where freight costs have increased exponentially.

• Oil: Energy markets remain on an upward trajectory, with Brent Crude (Brent Crude originates from the oil fields in the North Sea) currently at around $US86 a barrel. Concerns regarding the impacts of the Omicron virus to the global economy seem to be easing and forecasts are suggesting that the upward trend may continue as demand should be much higher than stocks currently available.

 • Commitment of Traders (speculator activity): The latest Commitment of Traders report on 11 January 2022 revealed speculators were down to just 51,000 lots net long, liquidating a massive 59,000 lots in the process. The sell-off was primarily driven by a major technical break lower, however on the positive side the market only moved by 115 points as commercials stepped in to mop up what they deemed to be cheap sugar. This may indicate that we are currently sitting on the bottom of a range. For the prompt March 2022 ICE 11 contract, 18.50 USc/lb is the first hurdle that it will encounter on the way up.


Overview: The Aussie dollar started the week as low as 71.49 US cents before strengthening to 73.14 US cents on Thursday and closing the week back at the 72 US cents anchor. Sentiment is mixed with overall equities underperformed while the energy sector outperformed.

• United States: Concerns over inflation and rising interest rates are still impacting general sentiment. The consensus now is that the first rate hike will take place in March, currently 90% priced in. There is some recent speculation that rates may hike by 50 basis points for the first time since March 2000. US December Retail Sales fell by 1.9% suggesting that the new Omicron wave took a big toll over the holiday period. US December Industrial Production fell by 0.1% with manufacturing output down by 0.3%.

• China: The US non-farm payroll release last Friday showed the unemployment rate fell to 3.9% and wage growth accelerated +0.6% month-on-month. These numbers may provide the grounds for a rate hike in March.

• COVID-19: It seems China’s zero-COVID policy is clearly dragging on the economy. Beijing reported its first Omicron case on Saturday just three weeks before the Winter Olympics. On the data front, Chinese GDP surprised with quarterly growth of 1.6%. (8.1% growth for 2021). Retail sales for December were below expectations, growing just 1.7% year-on-year (was 8% pre-COVID-19).

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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