Sugar Industry News : March 2018
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WORLD PRICE
The NY contract stayed in the doldrums during February :
With India suddenly increasing its forecast by 3 million tons, don't expect any improvement soon.
ALL OF BUNGE SUGAR UP FOR SALE
Bunge has been trying to sell its sugar assets for some time now but now it has announced that it wants to get out of sugar all together, no longer even trading sugar. The company has stated that it has identified several possible buyers but has declined to name any. ADM has been mentioned as a possible purchaser but it only recently left what small sugar interests it had.
WILMAR'S Q4 RESULTS DAMPENED BY SUGAR DIVISION
It is difficult to know what to make of Wilmar sugar. In its Q4 report last month the group's poor quarterly performance was blamed, in part, on the sugar division yet at the end of the month it went ahead and took a controlling interest in Shree Renuka, making an open offer for the remaining shares. At the same time, there is talk in the market that ADM is going to buy all of Wilmar's sugar division. It is just a rumour but smoke leads to fire ... unless it is really another rumour about Bunge?
BRITISH SUGAR STRUGGLING TO PROCESS ALL OF THE BEETS
In early February stories started to emerge of British Sugar struggling to process al of the beets from the 2017/18 campaign. The worst affected factory seems to be Wissington. That was before the UK and the eastern half of Great Britain in particular [where the beet is grown] was hit by a long period of Siberian air stream with temperatures consistently below freezing for days on end. Although it could well be worse for beets than the 2010 freeze at least it is much later in the campaign and all beets should be in clamps, not in the ground.
SWISS BEET INDUSTRY SEEKS GOVERNMENT INTERVENTION
Schweizer Zucker AG which runs the two beet factories in Switzerland and the beet growers federation is calling for tariff protection as it struggles with EU imports at ever declining prices following 2017's regime change.
AL KHALEEJ GOING AHEAD IN EGYPT?
Jamal al-Ghurair has long held ambitions for a project in Egypt – it was in the news back in 2014 as 'going ahead'. He has now announced that he has signed a deal with the Egyptian government and the project [called El Canal] is going ahead. The cost is stated to be US$ 1 billion and the lead financier is part of the National Bank.
The project will be in the Nile Valley within Minya governorate, some 200 km south of Cairo. [Interestingly, the state sugarcane industry has a factory in this governorate.] The land involved is said to be 77 000 ha, presumably because beets are only part of an agricultural rotation plan, and the slice is reported as 36 000 tbd which would make the plant – if it really is built – the largest beet factory in the world. The stated objective is to start production in mid-2020 : watch this space.
UGANDA TO BALANCE TANZANIAN DEFICIT?
Data from a report about presidential discussions between Uganda and Tanzania makes interesting reading. Tanzania has an annual shortfall of about 100 000 tons : demand is more or less 420 000 tons and domestic production 320 000. On the other hand, Uganda's demand is about 350 000 tons with a domestic production more like 450 000. There was much talk of a trade deal but one suspects that logistics will kill any attempt : although the two countries have a common border a good part of it is on Lake Victoria and the rest to the far west.
DANGOTE CLAIMS TO HAVE SIGNED A CONTRACT FOR SIX FACTORIES
The Dangote group is claiming to have signed a contract for the 'building' of six 'integrated sugar plants' in Nigeria. The talk is still of 150 000 ha so an average of 25 000ha per estate. It is not at all clear what 'building' means [is it engineer, supply and construct?] and the company has declined to name the contractor involved.
INDIA NOW FORECASTING 29 MILLION TONS
In January the Indian Sugar Mills Association was forecasting 26 million tons for the national production. Suddenly, in February it revised the figure to 29 million tons as it became clear that Maharashtra was likely to produce more like 10 million tons than the 7 million previously assumed. That leaves the industry in a real quandary because even if the federal government removed the current export restrictions the cost of production in India is higher than the world price. Ironically, the mere thought of India exporting drives the world price even lower.
AUSTRALIAN INDUSTRY WELCOMES THE PERU/AUSTRALIA FTA
Peru and Australia signed a free trade agreement last month and the Queensland sugar industry is getting excited. Perhaps that is premature. One has to remember that Peruvian agriculture is still recovering from the disastrous socialisation of the 1970's. Sugar production continues to grow strongly and what import is needed comes mainly from Colombia [will Australia be able to match that?]. As the USDA noted recently : Peru could soon become a net exporter.