Weekly Market Overview

• Overview: Despite not reaching new highs, it was another strong week for the ICE 11 sugar market with almost the entire futures curve now trading above 20 USc/lb as the future supply outlook remains extremely tight. The prompt March contract traded to a high of 27.28 USc/lb on Monday to a low of 26.30 USc/lb on Thursday before recovering to close the week at 27.03 USc/lb.

• India: In the lead up to the harvesting season, which is set to start in early November, the Maharashtra and Karnataka regions are experiencing hot and dry conditions following some much-needed rain in September. The Indian government is yet to publicly release a statement on an export quota for the 2023/2024 season, however most analysts are penciling in zero exports as food security and domestic food prices become the primary focus for India's government.

• Brazil: The Brazilian sugar cane industry group, UNICA, continue to report strong harvesting figures due to favourable harvesting weather conditions. In the second half of September the Centre-South region harvested 44.7 million tonnes of cane and produced 3.35 million tonnes of sugar, bringing the season-to-date totals to 493 million tonnes crushed and 32.6 million tonnes of sugar produced. Sugar mix remains above 50% for the fortnight and brings the total sugar mix to 49.5%. UNICA's first half of October will show the severity of the recent rain event in the Centre-South,and if harvesting has slowed as well as if TRS (Total Recoverable Sugar) has fallen.

• Oil: The news of ongoing conflict in Israil saw Brent Crude Oil surge more than 5% to above $90/ barrel on Friday. This has led some analysts to warn that prices well above $100/ barrel may be possible if the conflict spills over into other middle Eastern countries such as Saudi Arabia. Sugar has been the beneficiary of the rising prices and will likely be susceptible to any further movements, be it positive or negative.

• Commitment of Traders: As of 10 October speculators increased their net long position by 10,500 contracts to 175,500 net-long. Open interest surprisingly fell 6,000 contracts despite the late week rally.

Currency  

• Overview: The Australian Dollar (AUD) still faces plenty of headwind as evidenced by weaker than expected US inflation data last week. The AUD traded from a high of 64.45 US cents on Wednesday before falling to lows of 62.86 US cents on Friday.

• US CPI: Annual inflation in the United States was reported as unchanged at 3.7% in September, against expectations of a small reduction. While the next Federal Open Market Committee (FOMC) meeting is not till end of this month, The Fed is still trailing behind its 2% target and rates are likely to hold due to the cautious tone from its September meeting.

• Israel: As the Gaza war continues markets have begun to react with Crude Oil surging following the Hama organisation's attack on Israil. The initial attack posed a risk of logistical impacts as some shipping ports are located in the surrounding areas in the Gaza region. Global markets appear cautious of any potential involvement or sanctions from the United States, which would likely hamper risk appetites in global markets.

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