Sugar Technology
On-line News

June 2009

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Varied news from all over ....


WORLD PRICE

The world price continued to hold its strength during the month and is unlikely to go lower with ongoing deficit forecasts. During May’s New York Sugar Week, ISO predicted that there would continue to be a deficit during the 2009/10 year despite expected record production from Brazil. As a result it expects the price to pass 16 /# and perhaps go higher.

ISO’s global figures are a 7.8 million ton deficit this year and a 4.9 million one next year. Part of the predicted ongoing deficit is the result of a demand forecast increase from 164.4 to 167.7 million tons. The organisation is expecting a record 36 to 38 million tons from Brazil in 2009/10 and is expecting India to recover by about 5.5 million tons from this year’s dramatic low of 14.7 million.

Later in the month, Kingsman were predicting a 14.5 million ton deficit for 2008/10, up 3 million tons from the previous one and nearly 2 million more than ISO. They cited early ends to the crops in Asia [Pakistan, India and Thailand] and Mexico.

ITALY

As a result of an almost complete shutdown of the Italian industry, that country’s sugar company’s feature high on a recent list of the EU’s Common Agricultural Policy beneficiaries : Italia Zuccheri received €139.8 million and Eridania €125.3 million. That placed both in the top three of the entire list.

KENYA

Kenya produced about 518 000 tons in 2008, roughly the same as 2007, and had to import another 218 000 to meet the shortfall. But the KSB is reporting that it can make 600 000 this year – if only the factory utilisation is improved – as the crop is forecast at as much as 8 million tons of cane. Watch this space!

The KSB is also bringing in regulations that require cane be purchased by weight on the farm [no longer mysterious losses between farm and factory] and to ‘pay farmers according to the sucrose content of their crop’. The board makes it sound as if that part of the regulation is in the farmers’ favour but nowhere else in the world has that been found to be the case – at least not in the short term.

ZIMBABWE

Amazingly, Zimbabwe still managed to produce almost 300 000 tons of sugar in 2008 despite all of the problems that the country faced and still faces. The figure is 50 000 tons less than 2007 and is only half of the peak year at the turn of the millennium but is still a brilliant achievement for all involved.

It also looks as if help will soon be at hand : the EU is making positive noises about ‘progress’ in the country and there is talk of it releasing a small portion of blocked aid to the lowveldt sugar industry.

ILLOVO

South Africa’s Illovo Sugar, majority owned by British Sugar, had a good year last year and is planning a rights issue to fund expansion in Africa [presumably in the LDC’s that qualify for the EU’s EBA programme] on the news. Malawi contributed 45% of the profit followed by South Africa [19%] but Zambia was only 12% because of ‘the delayed start to the season and the disappointing mechanical performance of the plant after a factory expansion’.

This was the first major announcement since Don MacLeod’s retirement as MD but at least one part of the press corps hasn’t caught on to Graham Clark’s appointment : South Africa’s ‘Business Day’ attributed the announcement to a morph called ‘Graham MacLeod’ …

INDIA

The government has banned all sugar futures trading until December in India in an attempt to quell rising prices. However, most people in the industry don’t believe that the move will have an effect as the rises are due to the fundamental collapse of production within the country rather than any market manipulation : you cannot drop from say 28 million tons a year to just 14 or 15 without pushing up prices. Nonetheless, the local prices did slacken marginally [as did sugar producers’ share prices] although internationally prices firmed on the news.

PARRY SUGAR REFINERIES

The EID Parry / Cargill joint venture refinery at Kakinada [half way up the east coast of India] is now scheduled to start in June, some 6 months later than planned when it was originally announced in April 2006. The refinery is located in a special economic zone and must re-export its production although, with the current shortfall in India, anything is possible.

THAILAND

Close to final figures for the 2008/9 Thai crop are now available and show that cane production is down over 8% at 67 million tons. The sugar produced from that is 7.1 million tons compared to 7.8 million last year. Most of the reduction was as white sugar.

MITR PHOL LAOS

Thailand’s Mitr Phol group has shipped its first cargo to Europe from its new factory in Laos. Production in 2008/9 was about 23 000 tons but the company is planning to increase cane production in the are so that it can produce nearer 50 000 tons. In the end the operation will be limited by the short crop which seems to be only 90 days.

INDONESIA

Steam EngineChinese investors are reported to be ready to invest $195 million in two new factories in East Java but they have yet to receive central government approval. What was most interesting about this news item, though, was the picture used to illustrate it :

CHINA

Guangxi, producer of 60% of China’s sugar, is expected to be another 10% down on production year on year in 2009/10 having already dropped some 19% from a peak in 2007/8. That is a drop of about 2.5 million tons in just two years. The country as a whole is reported to be 11% down.

CHINA IN BRAZIL

China has invested $10 billion in Brazil’s Petrobras, presumably as a means of securing a source of ethanol for fuel.

FIJI

The EU has withdrawn Fiji’s sugar concession, worth about $30 million a year, for the second year running as a result of the interim government’s failure to hold democratic elections.

Fiji Sugar Corp, 68% government owned, shrugged off the issue and said it was going ahead with plans to double the cane land area, largely by opening its own estate(s). It didn’t say where the money was coming from to achieve such an ambitious target however and the government itself asked other ACP countries to plead with the EU on its behalf to reconsider the withdrawal.

USSC

Both the board of USSC and the South Florida Water Management District have voted in favour of the latest revised offer reported here last month. The agreement, still subject to financing, is for $536 million and buys 73 000 acres, of which 40 000 are cane land and the rest is citrus. As previously the agreement allows for USSC to lease back the cane land for at least 7 years. It is expected to ‘close’ in 2010.

LACASSINE DEBT

Despite being able to purchase the Lacassine thick syrup factory from Louisiana state on very soft conditions, the new Colombian owners have had to be given a six month grace period for other debt following the withdrawal of a financial partner [reported here last month]. The original construction was funded using state bonds and when it was sold for $60 million, repayments were spread over 44 years with a soft start. Since then a further $10 million has been borrowed for an ethanol plant, again state guaranteed, so it is in everybody’s interest to resolve this – and quickly.

SAVANNAH

It seems that the Federal law team investigating last year’s explosion at Imperial’s Savannah refinery is now looking into an incident at the old Sugar Land refinery in 1998. The Department of Labor wants a corporate fine or fines of nearly $9 million, citing more than 200 safety issues at Savannah and Imperial’s other refinery at Gramercy, Louisiana.

SUGAR COMPANY OF JAMAICA

It is more rumours than facts but what is clear is that the government has failed to offload SCJ as a single entity : everything is pointing to a break up of the company. There are, apparently, four short-listed bids as follows :

  • Energen Corporation [USA] : Bernard Lodge / Innswood / Monymusk;
  • Eridania Sadam [Italy] : Frome;
  • Hussey family [Jamaica] : Long Pond / Hampden
  • Fred M. Jones / Seprod [Jamaica] : Duckenfield

One side issue is the question of Hampden estate which went bankrupt over a decade ago and was taken over by the government : the original owners have taken out a court order to stop the sale.

COCA-COLA

Coke is returning to sucrose : but for its bottles, not its drinks. It has announced the ‘PlantBottle’ which is said to contain 30% non- hydrocarbon based plastic. The company describes it as follows : “an innovative process that turns sugar cane and molasses, a by-product of sugar production, into a key component for PET plastic” but is coy about the details.





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