Sugar Industry News : January 2018
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WORLD PRICE
The world price seems quite stable with a small positive trend but the real is breaking away again :
Only time will tell which pundits are correct!
EU OUTLOOK TO 2030 PUBLISHED
In December the EU Commission published its annual agricultural outlook but this time it looks forward more than ten years : all the way to 2030. It sees the production jump in the current campaign [the EU figure is to 20.5 million tons] following the regime change as a spike with production falling off to about 19 million tons by 2030/31. It clearly doesn't understand obesity as it predicts an increase in HFCS consumption during that time.
The full report is available on the Europa web site. The section on sugar starts at page 18. One quirk of the report is that it assumes that Brexit doesn't happen : which part of Article 50 does the Commission not understand? It is also noteworthy that it treats the possible Al Khaleej project in Yorkshire as a fait accompli... and it doesn't even acknowledge the 30% increase in UK beet this year.
NEW BEET FACTORY IN BELGIUM
A new beet factory is being proposed for Seneffe, some 30 km south of Brussels so firmly in the Wallonia half of Belgium. It is reported to be a €300 million cooperative project with an annual slice of 1.5 million tons so perhaps 15 000 tsd.
MUMIAS PUBLISHES DISASTROUS RESULTS
Mumias Sugar, once the crown jewel of Kenya's industry, has published its results for the year ending June 2017. Some are asking how the company can survive when its loss for the year increased by over 40% compared to the previous year's loss to nearly US$ 66 million.
The company blames the loss on drought but the data is strange. It says that it only crushed a little over 400 000 tons of cane – one third of the previous year's crush – but that it made just over 59 000 tons of sugar, more or less 6.8 tcts when the previous year had been a believable 16 tcts.
INDIA LOOKS TO NEARLY 5% BLENDING WITH DOMESTIC ETHANOL
It is reported that the India sugar mills have contracted to deliver 1.4 million cubic metres of bioethanol to the oil companies in 2017/18. That equates to 4.5% blending according to the Indian Sugar Mills Association.
INDIA URGED TO INCREASE IMPORT DUTY
Following Pakistan's decision to offer a US$ 100 per ton export subsidy, the All India Sugar Trade Association is urging the Indian government to increase the existing 50% import duty to 60%
OLAM TIES UP WITH MITR PHOL
In mid-December Olam and Mitr Phol announced that the latter had purchased 50% of Olam's Cilacap refinery on southern Java for US$ 100 million – almost exactly 10 years after Olam, a Singapore based trading company, acquired Cilacap. At the time, in 2007, Olam valued the purchase at just US$ 12.6 million : not a bad investment.
MACKAY SUGAR DITCHES QSL
Mackay Sugar, the one remaining sugar milling company tied to QSL, has given notice that it will terminate the QSL agreement from the end of the 2019 year. It has stated that it intends to have an 'on supply' agreement with the organisation which is what all other milling companies now have following the Federally imposed order. The relevant cane growers have expressed anger and as Mackay is some form of cooperative that might not be the end of the matter.
ABARES DECEMBER REPORT MORE BUOYANT
The Australian commodities bureau ABARES was more optimistic in its December report than it had been in the previous quarter, raising its average price for the 2017/18 year to 14 ¢/lb. Although it still sees high production at 192 million tons, it is now forecasting consumption to increase 5 million tons year on year to 186 million tons.
USDA EXPECTING A RECORD 2017/18
As a result of good year for beet [and so far the cane seems to have avoided severe frost], the USDA is forecasting a record 8.39 million tons [this site is always metric] of US domestic production. That seems to automatically trim back Mexican imports
GUYSUCO CROP DOWN TO 1990 LEVELS AND FALLING
Guysuco reported last month [on Christmas Eve – perhaps in the hopes that it wouldn't be noticed] that its output was 'nearly' 140 000 tons in the 2017 year. It hasn't been that low since 1990 when it hit a low of about 129 000 tons following the 1976 nationalisation and before Booker Tate were asked to go back in to manage the company. Even worse, though, the company is talking of 115 000 tons for the current year.
Last month the government also revealed that it had given Guysuco about US$ 155 million in the last two years and was expecting to have to give more both this year and next.