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Agri-commodities update: Sugar jolts awake to bolt upright

Sugar prices surge higher in a rude awakening for a market that has slumbered its way through the past week.


The US Dollar weakened over the past day against the other agri-currencies.  Some of the moves were sizeable too.  And some of them took the greenback nearer to new lows on some currencies, the Brazilian Real among them.  The Real is only motion away from trading the highest level in over a year.  The Australian Dollar too is stronger but is not yet near recent highs of 78¢ set in April.  The Aussie starts today at 76¼¢.

Grains & Oilseeds

  • Global wheat futures were weakened on Thursday.  Kansas and Chicago Septembers closed at new lows for this season.  The price falls are in line with those seen in corn.  The wheat market has stopped following corn so closely though, as the wheat market has approached loan program levels.
  • ASX East wheat futures gained a couple of dollars on Thursday.  ASX East January traded 2$ to close 243$/t.  Australian basis has crept high enough now to make Australian wheat now look a shade expensive.  The market will have a weaker bias in that context.
  • Corn futures prices were weaker Thursday amid choppy trade.  The US weather narrative is largely unchanged.  Though there are several pockets of dryness, on balance, the two week outlook for the Midwest remains favourable.  US corn export sales were strong last week though, so that likely prevented prices from slipping further.
  • Oilseed prices were little changed in a decidedly dull Thursday.  The soybean market continues to weigh up potential record US crops against record demand.  The US reported very strong new crop soybean sales for last week.  And a fresh sale of to China yesterday lent some additional support.  A higher Real is helpful context for US$ prices too.  Even so, favourable August weather in US crop areas is keeping a lid on the market.  Canola futures were similarly quiet on Thursday.  Forecasters say both Canadian and Australian canola crops are in good shape.


US and Chinese cotton futures gained sharply on Thursday.  ICE December closed at a near two year high.  The market drifting above 74½¢ looks to have triggered a large buy order, which propelled the market to highs above 76¢.  Some encouraging data hit the newswire yesterday too.  The USDA reported solid US cotton export data for last week.  China reported another weak clearance rate at its reserve auctions – just 24% of cotton on offer was sold on Thursday.  We do not think that Chinese mills suddenly have ample cotton supplies.  Only last week the China Cotton Association was urging the government to increase daily sales volumes to better meet demand.  That suggests there is an issue with quality and/or price.  Floor prices have eased somewhat this week, but take-up rates have continued to decline.  We think the quality of reserve cotton on offer is now much poorer.  If take-up rates remains this low, then China may find that the continued run down of its stockpile necessitates an increase in imports of higher quality cotton.


Sugar futures prices surged on Thursday.  Spreads too made sizeable gains.  The day's trading is a powerful whiff of salts after the mind-numbing range trading of the past week.  Trading volumes remained modest though so perhaps there is less than meets the eye to the move.  Nonetheless the auto-pilots behind some trading will care not about that caveat.  The market was ticking lots of technical boxes that suggested prices were going lower.  The abrupt rise last night puts that at least in doubt.  The trigger for the move high may have been the Brazilian Real’s rally but we don’t think that explains the scale of the rally.


NZX WMP futures rallied again on Thursday.  The market has a decidedly stronger look about it.  NZ pasture conditions look good heading toward spring.  Back to back seasons of very low milk-prices though have resulted in heavy dairy cow turnoff.  The deeps cuts to productive capacity will translate to tighter NZ milk output, regardless of seasonality.

Learn More

For a more detailed snapshot of market conditions, or to get the daily market update direct to your inbox daily, visit Commonwealth Bank.

Important Disclosures and analyst certifications regarding subject companies are at www.research.commbank.com.au. This report was originally published, approved and distributed by Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.

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