Sugar Industry News : January 2016
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The world price remained relatively stable with nobody being really too sure where it was going except that there is still talk of factories filing for bankruptcy which implies that if it doesn't go back up then production will fall. An oil price below $40/b doesn't help of course.
CRISTAL UNION REFINERY IN ALGERIA STARTS PRODUCTION
Cristal Union’s refinery in Algeria is reported to have started production. It has a nominal capacity of 350 000 t/a.
KENYA OPENS PRIVATISATION BIDDING
The government of Kenya finally invited tenders to buy 51% of its remaining five nationalised factories in the first half of December. It has reserved another 24% for the farmers and employees of each and intends to sell the remaining 25% via IPO’s when [if?] the companies are profitable. In practice Nzoia and South Nyanza [Sony] are possibly economically viable but Chemelil, Muhoroni and Miwani are almost certainly not. The latter two have been in receivership for a decade or more.
COMESA GIVES KENYA ANOTHER YEAR
In what is probably a sequitur to the item above, COMESA has extended Kenya’s sugar market exemption for yet another year. Kenya has always argued that it needs to have privatised before its market was opened up but consistently failed to even start to do so. If it hadn’t now at least started [again!] last month then COMESA would not have given the extension.
ZIMBABWEAN CROP TO DECLINE
As the crop in Zimbabwe comes to a close, Tongaat Hulett is predicting up to a 10% drop in production next year and it is not all related to the drought in southern Africa, part of the problem seems to be related to the economy. At the same time, the workers at the two estates went on strike demanding wage parity with the group’s workers in other countries which would almost double their salaries.
PAKISTAN SUBSIDISES EXPORTS
The government of Pakistan agreed in December to subsidise the export of 500 000 tons of sugar to the extent of about US$ 125 per ton on the basis that if the Indians can do it, so can we. The plan was to have exported 200 000 by the end of 2015 and the rest by the end of Q1 2016.
INDIA PREDICTS EXPORTING OVER 3 MILLION TONS
The Indian millers are predicting ending stocks at 6.7 million tons in nine months’ time, 2.4 million tons down on last year’s close. That is only about 3 months of demand.
QUEENSLAND VOTES FOR GROWERS TO DECIDE ON SUGAR SALES
Queensland’s parliament [Australia works on a federal system] has passed a law giving sugarcane growers the right to decide how the resultant sugar is sold [by the miller or by QSL] even though the grower sells his sugar to the miller. The industry is now in chaos with even Mackay Sugar being against the law even though it is the only supporter of QSL. One of the issues will be that a miller could refuse to buy the cane of growers who want to exercise their right – and there is nowhere else to process it.
Mitr Phol, owner of Maryborough Sugar and hence operator of four factories, has already cancelled its Aus$ 360 million Queensland investment programme as a result of this new law. Don’t be surprised if others – Wilmar and COFCO – follow. In the meantime, the government of Queensland [which was against the bill] has referred the bill to the competition authority although it is unclear whether that is a state body or a federal one.
YELLOW CANOPY SYNDROME STILL UNRESOLVED
The cause of Queensland’s mysterious yellow canopy syndrome has still not been determined although some causes have been eliminated and a possible symptom has been identified. Sugar Research Australia says that it has ruled out macro-nutrient deficiency, trace element deficiency and heavy metals as causes but it has not eliminated a fungal infection. What it has found is that affected plants have elevated silica content in the leaves and reduced magnesium levels.
FIJI PLANS REFINERY
As part of its post 2017 strategy Fiji Sugar is planning a small [150 000 t/a] refinery for its Labasa factory. It hopes to spend about US$ 9.5 million and for the project to have a four year payback.
HERSHEY STOPS USING BEET SUGAR
Hershey, a major US sweet manufacturer, has announced that it will not use beet sugar in its products because that will have come from transgenic beets. A decision arising from concern for its consumers – or a cynical marketing ploy?
HAWAIIAN PRODUCTION UNDER THREAT
Hawaii had a very wet summer and only produced 42 500 tons of sugar compared to 67 000 tons the previous year. The CEO of HC&S is reported to have said that the resultant operating loss is unacceptable and that the company needs to find an alternative business model. It has also emerged that the company is trialling cattle production on what was once cane land.
GUYSUCO EXCEEDS ANNUAL PRODUCTION BUDGET
For most companies it wouldn’t warrant a mention but for Guysuco to achieve its annual production budget, that is almost a miracle. The company made the announcement – its first such announcement in 11 years – while three of the factories were still crushing so it should comfortably exceed the 227 443 ton budget. The challenge will be to push the budget back up next year and still achieve it : the country used to consistently exceed 300 000 tons.
WILMAR AND RAIZEN TO FORM JOINT VENTURE
Brazil’s Raizen, itself a joint venture between Royal Dutch Shell and Cosan, is planning a joint venture with Wilmar. The move seems to be in response to the success of Alvean as we have had to learn to call the nearly two year old joint venture between Copersuca and Cargill.