Weekly Market Overview

Sugar

• After a choppy start to the week, raw sugar prices rallied following a bearish UNICA (Brazilian Sugar Industry Association) report, closing the week up 2.9%. The Jul21 ICE 11 contract reached its high of 17.26 USc/lb on the Friday and its low of 16.19 USc/lb on the Monday. 
   
• The latest UNICA report revealed multiple delays to Brazil's harvest due to rain for the first half of June. Production numbers reported 35,959 tonnes of cane and 2192 tonnes of sugar were produced for the fortnight compared to 41,812 tonnes of cane and 2560 tonnes of sugar in the same period last year. This represents an approximate 14% reduction. The percentage of the cane crop used for sugar production is at 46.12% and the Total Recoverable Sugar (ATR) remains high, compensating for a portion of the crop reduction.
   
• The latest Commitment of Traders data reported a sharper than expected liquidation of the net-long position as of 22 June. The net speculator position was down 35,000 lots to 185,000 lots net long.
   
• The Brazilian currency made some gains last week and is now at 4.93 Reais against the US Dollar. Despite the efforts of the Central Bank of Brazil to keep the Real strong, there may be some periods of instability due to current investigations into the Brazilian government's handling of the coronavirus pandemic. 

Currency  

• The Australian Dollar (AUD) and equities markets are still to recover from last week’s Federal Open Market Committee (FOMC) speech (see our Jargon Buster). Last week the AUD traded from its a low of 74.78 US cents on the Monday to peak on Friday at 76.17 US cents. However, it has failed to hold above the 76 US cent level on a live basis.
   
• The hawkish tone of the FOMC meeting continued to echo through markets for the week, with Federal Bank of Dallas President Robert Kaplan telling media inflation was higher as a result of the US economy pushing into a much better position. Kaplan also said he was in favour of 'taking the foot off the accelerator sooner rather than later'.
   
• In the United States, President Joe Biden continues to invest in stimulus packages after announcing an agreement with a group of bipartisan Senators on a $1 trillion infrastructure package. The deal includes approximately $440 billion of funds saved from previous packages, and is scheduled to take place over 8 years. The news boosted both the S&P 500 (see our Bonus Jargon Buster) and the NASDAQ to new record closing highs. 

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