SUGAR MARKET OVERVIEW

Sugar traded the week over a tight range on much reduced volumes. Only 50,000 lots traded between Oct14 and Mar14 on Friday night. The COT numbers now have the spec community sitting at a small short (–12,500 lots). The specs have been consistently paying the market this year, selling at the bottom to consumers and buying at the top from the producers. The market is beginning to focus on the possibility of El Nino not coming at all this year and it is expected this will keep pressure firmly on the Oct14 contract and some of the weather premium could be eroded from the Mar14 contract. The latest UNICA numbers show the Brazil crush is moving along nicely and the weather continues to be favourable on the whole. Small showers are forecast, but nothing likely to derail the current campaign.

CURRENCY MARKET OVERVIEW

The AUD has continued its sideways grind with prices trapped in a 9200–9500 range for the last four months. In spite of an increase in Middle Eastern fighting and a likely increase in tension between Russia and the West, risky assets (equities and commodity currencies) are not reacting. Iron ore prices have continued to hold under $95, but safe haven buying has held AUD steady. There isn’t anything on the horizon that would appear to be able to derail this at the moment. This week sees the FOMC meeting on Wednesday with no change expected to the 10b taper program and then the US employment report on Friday. Politics have swung against the incumbent in Brazil in front of the October election with a very close result now likely.