Sugar Industry News : January 2017
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WORLD PRICE
The world price shows a small kick-up at the end of December :
It is actually a case of damn statistics as the mid-December plunge well below 20 ¢/lb doesn't show on such a coarse analysis. One suspects that we can expect the price to remain in the 20 ¢/lb region for most of 2017 - unless some speculators take it into unsustainable heights for a while.
FRENCH BEET AREA TO JUMP 20%?
The French beet growers' organisation is predicting that the 2017 beet area in France will be about 400 000 ha, some 80 000 ha more than last year. The increase is in anticipation of the regime change which takes place on October 1 this year.
EGYPTIAN GOVERNMENT BUYS
Further to our recent notes about the sugar shortages in Egypt, the country's 'General Authority for Supply Commodities' has purchased 55 000 tons of whites for delivery this month. Notably, the purchase was made without the normal tendering process which is perhaps a sign of how desperate the government is.
TANZANIA TO GO AHEAD WITH MKULAZI SUGAR?
It is reported that the Tanzanian government has started work on a 200 000 t/a estate at Mkulazi in the Morogoro region, about 100 km west of Dar. This is the project for which the government has been seeking expressions of interest for many years, most recently some 15 months ago. However, the only sources of funding seem to be two social security funds of the government.
UGANDAN SUGAR SHORTAGE
The crop in Uganda was about 10% down this year which has resulted in a marked upturn in local prices - which were already high. Earlier in the year they were the equivalent of 44 ¢/lb but they had climbed by the end of the year to a reported 63 ¢/lb. The increase has had a knock-on effect in Kenya which has seen similar rises because it imports some of its own shortfall from Uganda.
THAI CROP DELAYED BY RAINS
The start of crop in Thailand was delayed by rains for about a month [much to the chagrin of those on the pre- and post- congress tours]. That, plus the earlier drought, is expected to a crop of only 9.1 to 9.2 million tons of sugar, some 3 million tons lower than the 2015/16 crop.
SUGAR FEATURES IN INDONESIA-AUSTRALIA FTA NEGOTIATIONS
Indonesia and Australia are trying to finalise a free trade agreement between them and, as always, sugar seems to be featuring large in the discussions. Presumably, Indonesia is concerned about the loss of revenue to the government if the import tariff is lost on Australian sugar because, whatever happens, Indonesia needs to import millions of tons from somewhere.
QSL RETAINS CONTROL OF TERMINALS
Australia's six sugar terminals are owned by the industry through a Company called Sugar Terminals Ltd [STL] but operated by QSL. Regular readers will be familiar with the ongoing problems between QSL and the foreign owned millers, particularly Wilmar which is the largest milling company in the country and now has both millers' seats on the STL board. Wilmar objected to QSL's operating contract as it gave it unfair advantage with access to confidential information. QSL has now agreed to split itself into two – presumably with a 'Chinese wall' between the two halves – and has therefore had its contract extended for another five years.
Wilmar will start selling sugar in competition with QSL in just 6 months time.
Meanwhile, there seems to be another problem brewing although QSL and Wilmar are not saying much : the flag is being waved by Canegrowers. That organisation is saying that Wilmar is refusing to produce anything except 'average' quality raw sugar even though QSL offers a variety of grades.
PUUNENE CLOSED FOR GOOD
The Hawaiian sugar industry has come to an end with the closure of the Puunene factory and the departure of the last sugar shipment to the mainland. An online auction is going to take place in the middle of January; it seems to be on an 'everything must go' basis.
JAMAICAN FORECASTS 100 000 TON CROP
Following on from last month's article, we now know that Jamaica only produced just under 83 000 tons in 2015/16 and that it is forecasting – perhaps better expressed as hoping for – 100 000 tons in the crop now started. The Chinese have definitely given up on Monymusk so that factory is being run by SCJ again and is forecast to produce 15% of the crop.
BRAZILIAN CROP FINISHES
In the end the Brazilian crop finished without any serious rain events so without any standing cane. The centre south crop seems to have finished at about 36.3 million tons, considerably up from last year as factories biased production away from ethanol. That may change next year as the crude oil price is now well above the recent lows [it is currently in the $ mid 50's per barrel but just one year ago it bottomed out at about $27/bbl].
ISSCT CONGRESS
Congress was held in Chiang Mai, Thailand, early in December. The Thai hosts were magnificent. The days of carrying home kgs of documentation are officially over with all papers provided on a memory stick at the time of registration. The papers, as always, were a mix of the good and the not so good, despite the peer review process.
It was agreed that next congress will be in Argentina in June 2019.