Sugar Technology
On-line News

February 2009

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The news is picking up again after the lull ...


According to Reuters, the consensus among traders is that the supply deficit will widen during 2009 with sugar ending the year at 14 US¢/lb. The 2008/9 forecast was a 3.75 million ton deficit, increasing to 5 million in 2009/10. Interestingly, the consensus is that the current economic climate will not affect demand which is expected to continue to climb. The biggest unknown is the impact of the low crude oil price on bio-ethanol production and the potential for more crystal sugar being produced as a result of any reduction.

Part of the issue is clearly the Indian crop, second largest in the world. The 2007/8 crop was 26.3 million tons but the government’s current year crop forecast has recently been downgraded again by 2 million tons and now stands at 18 million tons. Part of the reduction is technical – the sucrose content is down – but most of the fall is due to low cane prices forcing farmers back out of cane. The substantial drop in supply is leading to higher prices of course so we could see the rollercoaster going back up dramatically.


It looks as if the beet crop in Europe will be excellent this campaign, now substantially complete. In England there is talk of record breaking yields [80 t/ha] and in Germany the total production is now predicted to be 3.7 million tons, 1 million tons above the EU quota. The excess, termed ‘industrial sugar’ cannot be used for food use so will almost certainly be destined for bio-ethanol production.


The various arguments over the proposed purchase of USSC’s land by the State rumbled on through January and look like continuing for months to come.

Both Florida Crystals Corporation and the Belle Glade Cooperative have launched renewed attacks on the deal, the one through the courts and the other through the press. FCC wants a judge to quash the deal on the basis that to fund it the State will have to abandon other Everglades restoration projects. The Coop is claiming that the $50/acre/annum land lease-back element of the deal [see the December 2008 News on this domain] is below market price, saying that it has offered $150/acre/annum.

Meanwhile USSC has announced that 16 entities have expressed interest in buying the whole of the company [USSC has a 60 day ‘shopping’ period but even if another buyer is found the State has the right to match the price.]

The press in general has been musing [again] about the impact tha the recession might have on the deal. The South Florida Water District – the State agency which would undertake the purchase – has said that it expects to lose $91 million a year in revenues.


The privatisation sale of the Sugar Company of Jamaica to Infinity Bio-Energy is off. The announcement was made by the Government on January 30, citing Infinity’s failure to raise the necessary cash.

The privatisation process [this time round – it has been attempted before] started almost a year ago and Infinity were selected as the preferred buyer some six months ago. However the original date of sale [September 30 2008] came and went with nothing more than agreed extension until the end of 2008. In early January it was announced that the talks would continue until the end of the month.

In mid January the EU announced that it was freezing its support for the industry as ‘divestment is one of the preconditions of its support’. The support would be worth about US$ 100 million in the period 2006 to 2010 but only 12½% has been disbursed to date. The collapse of the talks must place the rest in jeopardy.

Meanwhile, the SCJ crop has not really started yet, apparently due to a shortage of spare parts or, more likely, the withholding of spare parts by suppliers because the company has not paid its bills.


The cane farmers stopped delivering cane to Tower Hill, the country’s only factory, on January 27 in protest of a new cane payment system based on cane quality and supported by core sampling. There was no sign of a resolution to the dispute as we went to press.


As we predicted three months ago, the Government of Guyana has announced the termination of the Booker Tate Guysuco management contract although we understand there will still be a technical services agreement between the two companies. The news comes at a time when Guysuco has announced that it will have to import sugar to make up a substantial shortfall : the Minister of Agriculture is reported to have stated that production in 2008 was only 226 000 tons compared to a budget of 315 000. Booker Tate are blaming strikes and heavy rain.


Brazil is forecasting a substantial drop in sugarcane production in 2009, perhaps by as much as 15%, as a result of a lack of rainfall. Ironic as the country had to extend its 2008 crop into December in order to complete the harvest which had been delayed by …. heavy rain.


Colombia’s crystal production was down 11% in 2008 to just over 2 million tons. The result was a major impact on exports which fell by one third to just 478,000 tons. Part of the problem was last year’s cane cutters strike which lasted nearly two months but we are also starting to see a permanent decline as more sugar is diverted into bio-ethanol.


Bunge, the US trading house with aspirations to be another Cargill that purchased Tate & Lyle’s trading division last year, is apparently negotiating to buy into India’s GMR group or its Rajshree Sugars company – depending upon to whom you talk. The company is apparently wanting to get into sugar production itself.


At the start of January, China announced plans to buy up 800 000 tons from local producers in order to stabilise the price. Later in the month, with 500 000 tons already purchased, it was announced that the southern province of Guangxi had again been hit by frosts, threatening its sugarcane.


The sugarcane crop in Fiji has been severely damaged by five days of torrential rain and floods in mid January. At the end of the month, although there was a lot of subjective description, there was still no accurate assessment of the damage.


A company called Addax International, thought to be part of Canada’s Addax Petroleum – which has a lot of interests in West Africa, is reported to be investing in a sugarcane based bio-ethanol project in northern Sierra Leone. Little technical data has been released but the project is said to be based on a 20 000 ha estate. The reported production of 1,200,000 ℓ/a is clearly wrong.

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