March 2011 Welcome to our news page! We try to bring you the latest news and comment on this page but it will always be a better place if you send us your news. You can write to us by clicking on the Contact link at the left. Australia and the weather again : STOP PRESS BP CHASES SHELL BP has announced that it has purchased 83% of Brazil’s Companhia Nacional de Açúcar e Álcool [CNAA] for US$680 million. The price includes taking on all of the company’s debt. CNAA has two mills operating and one under construction. When that is complete it will have an annual crushing capacity of 15 million tons of cane. CYCLONE YASI As last month’s news went to press Queensland was braced for the arrival of cyclone Yasi. Regular readers will remember that much of the region had standing cane due to the unseasonal and subsequently torrential rains, over 5 million tons of it. Yasi made landfall at Mission Beach, close to Innisfail and some 70km south of Cairns so close to where Cyclone Larry hit in 2006. It was a category 5 storm – the worst you can get judged by wind speed – and was also very large. Being a southern hemisphere event, the worst damage was to the south of the eye so Tully was severely affected. Immediately after the cyclone hit, Maryborough Sugar, owner of Babinda, Mulgrave and South Johnstone asked for its shares to be suspended while it assessed the damage. Early estimates put the cane loss at 50% in some of the growing areas. Some farms were reported to be totally wiped out : no crop, no farmhouse, no equipment. As the month progresses the level of damage seemed to be confirmed although the full effects will not really be understood until mid year. As an example, Tully is estimating a 25% physical loss plus a sucrose loss so 30% in total, equivalent to 75 000 tons of sugar less than estimated for this year. One estimate has put next year’s Queensland crop as low as 3.5 million tons, some 100 000 less than what was a very poor last season. Queensland Sugar, the state’s exporting company, has now revealed the effect of that standing cane from before the cyclone : it will only be exporting 2.2 to 2.4 million tons compared to its 3.2 million budget. In many cases it will have to but sugar from say Brazil in order to avoid defaulting on contracts but if you were buying Australians would you be happy with Brazils? WORLD PRICE We seem to have entered a period of relative stability with the price hovering around 30 US¢/lb. That may be because some of the many parties which try to predict global supply and demand are voting for more or less a balance between the two in the year to come. Let’s hope so. MARYBOROUGH CLOSES BABINDA Within days of Yasi striking the area, Maryborough announced its intention of closing its Babinda mill. Part of the reason was the effect of the cyclone but it is clear that it would have happened anyway as cane growing has steadily reduced in the region over the last 10 years. The factory was officially closed by the end of February. The cane still grown will be milled at Mulgrave and South Johnstone BUNGE LOSES TULLY In January we reported that a proposal from Bunge to pay US$ 127 million for Tully was unanimously accepted by the board. Last month the shareholders had their say and voted down the proposal. The issue is that the company constitution permits no more than 20% of the shares to be held by one party and to change that at least 75% of the existing shareholders must be in favour. One of the shareholders known to vote against is QSL, the state’s sugar sales company which owns 13% of Tully [how and why it has shares in a producer is not clear]. Mackay Sugar, which owns 4% of Tully, is also known to have voted against and has already stated that it is interested in merging with Tully and, who knows, maybe Maryborough will try again? Bunge has said that it will seek other opportunities in Australia and would still be interested if Tully wants to return to discussions. MITR PHOL Mitr Phol, probably the best known of Thailand’s sugar producers has announced US$120 million of new electrical export ptojects. Two thirds of the budget is scheduled for a new 57 MW station at its Kalasin factory and the rest is for a 32 MW expansion at its existing Dan Chang station. Mitr Phol has also built a 32 MW station at its sugarcane factory in Funan province. UP MILLS CLOSE EARLY Nine factories in India’s Uttar Pradesh state are reported to have closed early due to a lack of cane. Estimates for the Indian crop are still running in the 24 to 25 million ton range however. GULF Two items of note : the Al Khaleej refinery was shut for the whole of February due to unfavourable economics [it cannot have been a lack of raws, Jamal has a 1 million ton store] and United Sugar has postponed its planned expansion at Jeddah [which would have taken the refinery from 1.2 to 1.5 million tons per annum. BRITISH SUGAR Last month’s news reported the dire situation of the English beet crop. All four factories have now finished processing with 25% of so of the beet still in the ground but unprocessable and British Sugar is reporting a loss of £20 million [US$32 million]. That means that the famers must be facing a much larger loss. The company has announced various measures to ease that burden but a loss is still a loss. TRANSGENIC BEET The US courts plus the plaintiffs and defendants seem to be making the transgenic beet more complex all the time but it looks as if the USDA may be winning. In early February the USDA announced its interim rules for growing transgenic beet in 2011 and 2012 pending the full EIA it is now undertaking. The judge at the centre of the row refused to stop the sowings. However, he still had a court order in place that required this year’s stecklings [the mother plants which produce next year’s seed] to be destroyed. The USDA had appealed that decision and the appeal was still pending. If they lost, there would not be any seed to sow in 2012 so the interim rules would be of no value after this year. Perhaps they had consulted the crystal ball because towards the end of the month an appeal court found in their favour. It is not clear if the plaintiffs can appeal the appeal. FLORIDA FREEZE The full impact of this season’s freezes in Florida are starting to be understood with the Belle Glade co-op reporting the end of its crushing season, the second shortest in history. It records three separate freeze events, one of 9 hours at the start of December, one of over 12 hours in the middle and one of seven hours at the end. Last season the co-op crushed 2.7 million short tons of cane, producing 316 081 short tons of sugar [8.54 t/t]. This season it only managed 2.4 million of cane and 265 865 of sugar [9.03 t/t]. GRAMERCY STARTS UP Cargill has reported that LSR, its joint venture with Imperial and the local cooperatives, has delivered its first refined sugar. CUBA Cuba has announced a good start to its crop with all 39 of the mills that remain in operation. The bad news is that the government expects less cane than last year and that year was a disaster in its own right with only 1.1 million tons of sugar produced. It is hoping that better sucrose content and higher overall recovery will compensate for the fall in the available cane. Meanwhile, the government has announced that it is phasing out price controls so internal sugar prices will rise and, presumably, consumption will fall. BELIZE BSI had to shut down for three weeks last month dues to some [unspecified] problem with the turbines on its export power station. As we went to press the factory had managed to get one of the machines back somewhat earlier than expected but it then developed another fault. The issue seems to be related to high solids content in the HP steam. Watch this space! SHELL + COSAN = RAIZEN In what is probably the first step to diverting more sucrose to ethanol, Cosan and Royal Dutch Shell [which controls Cosan in any case] have announced the formation of ‘Raizen’, a joint venture ethanol company said to be worth $12 billion and to have the capability to produce 2.2 million m³ of ethanol per annum. KENYA PRIVATISATION The government has admitted that it cannot see the privatisation of its five factories taking place before sugar becomes a freely traded commodity within Comesa, the East African common market, in 12 months time. That is somewhat later than the June 2010 date originally set. ZIMBABWE It looks as if Zimbabwe is slipping back into stealing land. Last month supporters of Mugabe took over Mkwasine, the estate which is remote from the two factories and it has been reported that the Vice President has encouraged the same people to take over all of the land belonging to Triangle and Hippo, leaving the two Tongaat Hulett owned companies with just the factories. SWEET SORGHUM Sweet sorghum has long been proposed as an alternative or an adjunct to sugarcane, primarily as an energy crop. Chromatin is a biotechnology company that is working on plant hybridisation specifically for high energy density [fermentable sugars plus fibre] and is claiming that it has three lines which outperformed all others in a 50 hybrid controlled test. 
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