US ELECTIONS ARE BEHIND US NOW, BUT WHAT IS AHEAD FOR AGRI COMMODITIES?
The US elections are over and President Trump is back. For the next few months, the World will listen and watch what the US economic and foreign policies may become and whether there will be a significant change.
There is a moderate concern in relation to possible higher US import tariffs for certain products and from certain countries. The US inflation was on the way down and interest rates were falling, although slowly. Will inflation rise again?
The risk of a stronger Dollar exists, but so is the risk of European currencies as well Latin America countries falling on their own merits due to political and economic issues. So far, the market is “buying” Dollars and Bitcoins!
US policies in relation to Crude Oil and Gas exploration and the environment are also a concern, not to mention OPEC producers which have been trying very hard to keep prices from falling. World Crude demand is up, but so is production.
WILL THE US PRODUCTION RISE FURTHER? Perhaps, but US crude oil stocks are low, therefore a larger domestic production may help stocks being re-build, for a raining day!
So, Crude Oil, Gasoline, Biofuel demand and the trajectory of the Dollar vs. many currencies like the Brazilian Real may affect the value of sugar in the World Market to a certain degree.
Commodity prices should be influenced by their respective S&Ds, but also on the short term, by the liquidity “investors” bring to the market, in the form of buying and/or selling.
Grain and Oilseed crops in South America are expected to rise and a stronger Dollar with high carrying costs will encourage farmers to let them go! The US and China relationship going forward may benefit South American exports ad the cost of US exports.
WHAT ABOUT SUGAR? Sugar prices in the World market fell from about UScts/lb 28 cts in Nov 23 to mid UScts/lb 17s cts in Aug 24. The fear of Indian exports and high carrying stocks in Brazil caused many “investors” to sell their NETT longs and go short.
The prolonged drought that many parts of Brazil endured since April 24, reducing cane productivity and the absence of Indian exports caused the market to rally back up to about UScts/lb 23 by mid Oct 24.
The latest news out of India is that the NETT sugar production would be around 29 mln m/t, down about 2sh mln m/t vs last year and similar to domestic needs. India is carrying 3sh mln m/t higher stocks, but it seems the Indian Government will not allow exports for the coming year, again. Time will tell but that’s the felling right now.
Sugar prices have retreated somewhat and the US elections results are now casting doubts on whether the retreat is temporary or we have seen the highs!
In terms of S&D, many analytics see a small deficit or a small surplus for 24/25 (April/March) and the main difference tends to be related to what sugar consumption is (no stats on that) and what certain crops may end up, like India and Brazil.
18 | ADMISI - The Ghost In The Machine | Q4 Edition 2024
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