Sugar Industry News : May 2017
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WORLD PRICE
At least the world price more or less re-stabilised in April ...
... but only at the level found in March. The consensus, however, seems to be that it has further to go yet.
FO LICHT IS PREDICTING 190 MILLION TONS FOR 2017/18
FO Licht has announced that it expects the 2017/18 year to produce 190 million tons, up 13 million tons from its forecast for the current year. It expects demand to be above 187 million tons. Its rationale seems to focus on India returning to a normal crop – which would add 4 million tons – and the impact of the EU regime change – which it thinks would add 3 million tons.
RIOTING AT NZOIA
The local cane farmers at Kenya's Nzoia factory went on the rampage last month as the acting MD was replaced by a permanent MD. It seems more to do with liking the former than not liking the latter and that is because he has [finally?] been paying off the company's debts to the farmers in the two months during which he has been acting. The result of the riot was that the company agreed to leave the acting MD in place 'until after the country's elections in August'.
UP PRODUCES A RECORD CROP
Although the 2016/17 crops in Maharashtra and Karnataka were a disaster, that in Uttar Pradesh seems to have been a record despite the land area being down. The results are being credited to a new high yielding, high sucrose early cane variety - Co 0238.
Farmers are reporting marked improvements in yield [as much as 20%] for the variety and mills are reporting marked improvements in recovery [as much as 12% improvement across the entire crop] but the danger is that it is already about 35% of the state's planting. Are we heading for another genetic disaster such as that which hit Australia a decade or so ago?
ISMA WANTS NO [MORE] IMPORTS
A slight change from last month's headline as the Indian government did indeed approve the import of 500 000 tons in April. The Indian Sugar Mills Association continues to beat the drum that says stocks will be [just] adequate but some commentators are expecting the government to ignore it and to import another 1.5 or 2 million tons. As politicians have lost power in the past because of sugar shortages / high prices one expects the commentators are probably right.
What has transpired is that the latest arrival date for the 500 000 tons has been extended to the end of June and the government has imposed a two month deadline for the sugar to be refined so it will all be in the market, at the latest, by the end of August.
PRELIMINARY THAI CROP FIGURES AVAILABLE
The Thai Sugar Millers Corporation has announced preliminary figures for the crop now ending. Those readers that attended the ISSCT congress in Chiang Mai last December will know that the crop started late due to rains. In the end those rains were beneficial as the country made 10 million tons from 93 million tons of cane.
WILMAR CONTRACT BEING SIGNED
The situation in Queensland is, as usual lately, as clear as mud although it does seem that growers in the Burdekin are signing the new Wilmar contracts. What is much less clear is whether Wilmar has softened the contracts to avoid the Federal government imposing a 'code of conduct' on the industry. The politicians are in uproar over that threat as it is being done without any parliamentary debate or vote.
Another factor at play in the state is that there seems to be a severe drought [despite the flooding caused by Cyclone Debbie]. As an example, the cane growers in Maryborough are suggesting that they will lose half their crop to drought this crop.
MACKAY WANTS TO SELL MOSSMAN AGAIN
In March we told you about the financial problems at Mackay sugar and suggested that it might sell the Mackay power station. Although that might still be the case it seems that it also wants to divest itself of Mossman factory, a business that it only purchased five years ago. At this stage it seems that the local cane growers want to buy it again : watch this space!
MEXICO / US WAR
Last month we asked who would blink first in the latest spat between Mexico and the US and it seems that the answer is the US : last month the USDA increased its forecast for import requirements from Mexico so Mexico increased its quotas. Talks are expected to resume shortly in Washington.
At least we now know that the 'war' is not going to become Armageddon : President Trump announced at the end of April that he would not cancel the entire NAFTA agreement as he had threatened to do.
CONAB FORECAST FOR CENTRE SOUTH IS DOWN
Conab, the Brazilian crop agency, has issued a downbeat first forecast for the 2017/18 crop in Centre South. It sees the land area falling due to some companies facing financial difficulties and it sees other companies not maintaining re-planting, something which will have a longer term impact.
It does note, however, that there is likely to be a minimal impact on sugar production because it expects factories to push production more to crystal as ethanol remains in the doldrums. That, despite Petrobras increasing the price of ethanol which should actually work against crystal sugar.