Sugar Industry News : February 2019
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WORLD PRICE
The world price spent January bouncing around in the 12 to 13 US¢/lb range :
Again, nobody seems sure where it might go.
SUEDZUCKER ANNOUNCES FACTORY CLOSURES
At the end of last month Suedzucker announced that it was planning to cut capacity by about 12% in order to save some €100 million per annum. The company confirmed that it would be closing factories without giving details. It owns or controls through its Agrana, St Louis Sucre and Tirlemontoise subsidiaries a total of 32 beet factories across 11 European countries.
NORDZUCKER PREDICTS LOSS BUT IS MORE UPBEAT
Nordzucker announced its ¾ year results last month with profits of just €17 million [compared to previous year's equivalent figure of €143 million] and reiterating that it was expecting a loss for the full year. It too wants to cut operating costs [by about €60 million] but makes no mention of closures. It also reaffirmed that it was in 'concrete negotiations' with Mackay so let's hope that they reach a satisfactory conclusion [for Mackay's sake].
BRITISH SUGAR INCREASES PRODUCTION ESTIMATE TO 1.15 MILLION TONS
Last month British Sugar increased its 2018/19 forecast from 1.05 to 1.15 million tons, saying that, although land area and beet yields were lower than last year [a record year], sucrose content was better than anticipated.
TEREOS SPEAKS OUT ON BREXIT
Last month the head of 'Product Management' of Tereos, the French cooperative, tried to warn the UK that a Brexit without a deal would result in a higher sugar price because nearly 25% of the UK supply comes from EU imports. He seems to have overlooked the fact that Thames refinery has more than that amount in surplus capacity which cannot be used because of current EU structures. Outside of the EU, the UK will be able to import raws again and Thames will run at capacity [i.e. profitably].
TANZANIA OPENS ITS BORDER TO UGANDAN SUGAR
Tanzania and Uganda seem to have reached an accord which, inter alia, allows Tanzanian sugar to be freely exported to Uganda. However, the Ugandan producers are not particularly enthusiastic, saying that Tanzania only turns to them when they are in difficulty. Why they say that when Tanzania has a shortfall of about 290 000 t/a is difficult to understand.
Meanwhile, Tanzania is again trying to entice investors to develop more sugar estates in the country despite several previous failed attempts. There is certainly the land but is there the water?
MAURITIUS CLAIMS TO PRODUCE 600 000 T/A
A press report last month quoted the CEO of the Mauritius Commercial Bank as claiming that Mauritius produces, on average, 600 000 t/a of sugar and that 530 000 t/a is exported to 'the EU and the UK'. In practice, you have to go back to 2004 to find the last time that the country's production was 600 000 t/a. The latest production figures suggest that it is currently about 350 000 t/a.
On the other hand, the gentleman was very up to date – actually slightly premature – in his description of the export destination(s).
INDIA TO INCREASE MINIMUM SELLING PRICE?
It is being reported that India's federal government is about to increase the minimum selling price for sugar by 10% in order to again ease the pressure on the sugar millers. However, it is only three months before the next general election so to do so would work against the current government.
MAHARASHTRA TO ALLOW PART CANE PAYMENT IN SUGAR?
The sugar commission in Maharashtra has apparently approved in principle the payment of part of the cane cost in sugar rather than in cash. From the commission's point of view it is seen as a solution to the problem of large payment arears and the excess sugar in India in general. The move seems to meet with approval from the farmers but it is likely to meet opposition from the sugar traders.
OLAM TO SHUT ITS SUGAR DESK
Olam, the Singapore based trading house, has announced that it will close its sugar desk but it has not made any comment about its sugar assets. It owns two factories in India and, as we reported a year ago, it merged its Indonesian refinery at Cilicap into a JV with Mitr Phol.
NORTH QUEENSLAND FLOODING
As the month of January came to a close, there was a convergence zone involving a 'very active' monsoon band and a moist equatorial air sitting over northern Queensland. It was dumping considerable rain and flooding, expected to get much worse, was starting to occur. This will inevitably affect the cane crop in the region.