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The first item below says it all : what a year was 2005!
2005 : WHAT A YEAR!
It isn't every year that three hurricanes hit the US cane industry and a major earthquake - felt around the sugar world - hits Europe. The consequences are significant.
The 'earthquake' was the agreement on reform for the EU sugar regime of course. It was amazing that the 25 nations managed to reach agreement on such a contentious issue. It's impact will be felt by all - not just the sugar producing states within Europe and the ACP countries that export raws to Europe. The raw sugar price is already reflecting that :
From the end of April it started to lift off the 8 to 9 US¢/lb plateau that it was on and by the end of October it was at about 12 ¢/lb. From there it just rocketed as people realised that the EU deal would go through so that the year closed at almost 15 ¢/lb : some 70% up in 12 months. As we have commented here before, part of the increase is due to the realisation that sugar is an energy commodity and the sustained high crude oil price has helped support sugar.
The US hurricanes will be less significant in the long run that the earthquake : there can be no doubt that the US - and therefore NAFTA - will have to make some changes to the North American sugar regime.
The WTO ministerial meeting in Hong Kong during December didn't seem to achieve much [other than providing a focus for international protestors] although some politicians put a brave face on it. The outcome seems to be a very flimsy agreement to end farm export subsidies by 2013, with the expressed intent of ending 'a substantial part of them' by the end of the first half of the negotiation period. Clearly that doesn't mean much so there is a lot of work still to be done by the hard working negotiators.
As farming was the dominant issue, it is unfortunate that we couldn't find any comments on how Peter Mandelson - the EU Trade Commissioner - got on with the WTO Director General Pascal Lamy. A year ago Lamy finished his term as the EU Agricultural Commissioner.
NEW POWER AXIS?
The WTO meeting gave the ministers of sugar producing countries to get together. A group of eleven of them, including Australia, Brazil, Guatemala, India, South Africa and Thailand, then announced the formation of the 'Global Alliance for Sugar Trade Reforms' [GASTR]. Buoyed by the success of the WTO case against the EU, the group now wants to see trade barriers to a free sugar market removed.
The ASR [Domino] refinery has finally reopened after four months enforced closure. The refinery was seriously flooded when hurricane Katrina hit New Orleans in August and has been out of action ever since. One of the re-start problems facing the company has been finding the employees who were scattered around the US by the evacuation. 90% of them are now back at work, housed by the company in temporary trailers close to the refinery.
US INCREASES QUOTAS AGAIN
The USDA has announced a further 450,000 tons of import quota in response to the crop reductions resulting from the three hurricane strikes on the cane sugar industry in 2005. One third of the allocation is for refined sugar on a 'first come, first served' basis and the rest is for raw sugar. Interestingly, the department notes that it recognises that even more sugar may have to be imported later this year. The full text of the announcement is available on the USDA web domain.
Following last year's suspension of processing there, Amalgamated Sugar in the US north west has announced the closure of its beet factory at Nyssa in Oregon. That will leave the company with three factories : Nampa, Twin Falls and Paul, all in Idaho
The company also faces a problem with this autumn's weather which has been unusually mild. Some of its beets have been thawing out, resulting in rapid deterioration and therefore sugar loss.
In direct contrast to last month's announcement, Indonesia now says that is planning for the 'Indonesian Association of Sugar and Wheat Flour Companies' to establish 11 new sugar factories outside of Java. Of the first two, annual output of 60,000 tons each, one will be on Sulawesi and the other on Kalimantan.
Louisiana Agriculture Commissioner, Bob Odom, told the press in mid December that he hoped to have the new Lacassine syrup mill running by December 17 but that must have been very close to the end of crop and we have not seen any confirmation that cane was crushed.
What we do hear on the grapevine, however, is that the controversial sister project at Bunkie has been given the go ahead. It is unclear at what level approval has been given and again, there is no confirmation : watch this space!