Sugar Industry News : April 2017
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The world price crashed last month, losing all of the gain from the last 12 months :
The slide started relatively early in the month without any clear trigger. Having opened at 19.48 ¢/lb, it closed the month at only 16.76.
EU POST-REGIME CHANGE BEET SOWING STARTS
Farmers across the EU have started sowing a much larger crop than in the recent past because the beets will be harvested in the free market world just six months away. France's Tereos is reported to have contracted for 25% more beets than last year.
MUMIAS CALLS FOR REGULATION
Mumias is calling foul on the lack of industry regulation as smaller start-up factories take cane that it considers its own. Interestingly, it is supported by the Kenya Sugarcane Plantation Workers Union. The real problem probably lies with the Sugar Board granting licenses too closely spaced.
The call came at a time when Mumias had just announced a US$ 28 million loss for 2016. Part of the problem is clearly a lack of cane [down 45% on the previous year] which has also impacted on the electrical exports, triggering [probably severe] penalties.
PAKISTAN FACTORY MOVES ARE ILLEGAL
A simmering dispute about some sugar factories being moved to new locations has resulted in the High Court locking the gates of two of them. The factories have presumably been moved to better cane areas but in doing so they have become poachers to existing factories in those areas.
INDIAN FORECAST DROPS TO 20.3 MILLION
In September 2016 – six months ago – the Indian Sugar Mills Association [ISMA] was forecasting the 2016/17 output at 23.3 million tons. We reported in February that ISMA had dropped its forecast for 2016/17 to 21.3 million tons, only Shree Renuka being more pessimistic at a mere 20 million tons. Just two months later and it looks as if Shree Renuka was right : ISMA dropped its forecast again in early March and is now forecasting 20.3 million, the lowest output since 2009/10.
ISMA WANTS NO IMPORTS
India consumes about 25 million tons of sugar each year, a figure which continues to climb. A production of 20.3 million [see above] leaves a shortfall of nearly 5 million tons but the Indian Sugar Mills Association is saying that no imports are needed. It has written as such to the federal government saying that if, nonetheless, the government wanted to import then they should be limited to 400 to 500 000 tons. That is based on a demand of only 24 million and an early start to the 2017/18 crop. On that basis, the year ending stock would be just 4 million tons – say two months' supply – so the Government is likely to ignore its message.
QUEENSLAND EAST COAST HIT AGAIN
Another cyclone – this one dubbed 'Debbie' – hit the east coast of Queensland at the end of March. It made landfall somewhat north of Proserpine so about half way between Mackay and Townsville. It is too early to get accurate estimates of cane damage but there is talk of 35% of the Proserpine cane being lost and 20% loss in total across the Mackay region. There is no news yet from the Burdekin region which would have borne the brunt of the cyclone. Wilmar has five of its eight factories in the area between Mackay and Townsville.
AUSTRALIAN SUGAR MILLERS TELL POLITICIANS TO KEEP OUT
The Australian Sugar Milling Council has stated : " We call on the Prime Minister and the Federal Government to resist any further calls for political intervention in the industry." That was on March 27 and the next day the country's Productivity Commission issued a report on agricultural regulation saying that Queensland's recent regulation of the sugar industry should be scrapped and QSL should lose its status as a charity.
What did the Federal Government do? On March 29 it announced a federal regulation that will replicate the Queensland one.
On a more positive note, it seems that the Wilmar / QSL talks are making progress – which is why the ASMC wants politicians to keep out.
POLITICAL DEBATE IN FIJI OVER PENANG'S FUTURE
Penang factory was never re-opened following last year's Cyclone Winston, the government claiming that it would cost $24 million to restore the factory. The National Federation Party – the party that seems to represent the Fijians of Indian origin – is now claiming that it would build a new factory there is elected. That is a big 'if'.
MEXICO / US WAR FLARES AGAIN
Mexico has cancelled all sugar exports to the US amid ongoing bickering between the two countries that is well known to regular readers. Officially the permits were only suspended and that was on the basis of having filled quotas early but it is almost certainly a political move which leaves the US about 4 million tons short over a full year. Who will blink first?