Sugar Technology
On-line News

June 2010

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Confusion in the market place :


The world price dominated the news this month, mainly because nobody can decide what it is going to do, nor what the fundamentals might be. Several well known analysts switched stories through the month so it is probably best to sit and wait. The important player is India of course and who knows what will happen there [see below].


India is again causing chaos in the world market : this time because the Federal government is predicting that it may become an exporter in the 2010/11 year. However, the figures don’t stack up : it is reporting an 18% increase in planting which would take production to perhaps 22 million tons when demand was 23 million tons last year and growing at several percent per annum. It might be 24 million tons in 2010/11.

Even worse is the 30 million tons forecast for 2011/12. On the other hand that ignores the fact that this year farmers will not enjoy the bonanza prices that they were being paid for cane last year. Yes, the government has increased the ‘fair and remunerative price’ [FRP] by 7% for this season but some millers in UP were having to pay 200% of the FRP last year : no wonder farmers are switching back to sugar. The real question is will they stay in sugar if the price drops back to the FRP. Look what happened about three years ago following two years of producing around 28 million tons, output fell to 14 million tons in just 12 months.

There is also talk of the Federal Government giving up state control of the industry – except that it still wants to set the FRP. Perhaps it should stop interfering all together so the world can benefit from a stable industry or take total control to achieve the same result.


We hear that the ~1800 t/d RSO refinery in Kakinada [a port on India’s central east coast, more or less due east of Hyderabad] owned by Cargill in a jv with EID Parry is finally due to start up. The process is reported to be a direct repeat of Cargill’s Homs refinery in Syria but it has a much larger power station at 35 MW. That means that approximately 25 MW will be exported under a PPA that the refinery has signed with the local state distribution company.


Indonesia’s government plan for the sugar industry calls for the industry to be producing 5.7 million tons by 2014 – even though it only produced 2.55 million in 2009. There is talk of allocating an additional 300 000 ha of land to ‘investors’ and the replacement of aging factories. The new land is all over the widely dispersed country, including on islands already shown to be too wet for profitable cane production.


Australia's Foreign Investment Review Board has delayed any decision on whether Bright Foods can buy CSR’s Sucrogen division for at least 90 days. The company, which did not perform well last year, had been hoping to place documents before shareholders in August, allowing them to choose between a spin-off on the local stock exchange or a sale to the Chinese. Interestingly, there has been no talk in recent months of the big international players being interested in a deal.

Meanwhile CSR has announced that its deal to buy out Mackay Sugar from the Mackay refinery has expired as a result of ‘the failure of the conditions precedent being met within the agreed timeframe’.


Australia’s first furfural plant has been officially opened at the Proserpine mill about 100 km north of Mackay. Unfortunately no capacity data is available but presumably the plant processes all of the bagasse produced by the sugar factory, returning the fibrous residue to the factory power station. There were rumours of South African involvement in the project so they may avoid the problems of having to fire a fuel no longer with bagasse properties.


Despite the predictions of several analysts, T&L didn’t announce the closure or sale of its remaining sugar assets when it announced its results in mid May. However, the idea has taken hold in several quarters, to the extent that British Sugar seems to have put on hold its plans for a refinery at its Cantley beet factory. [British Sugar owns the industries in Malawi and Zambia, both low cost producers and countries entitled to use the EBA scheme so would be a logical owner of Thames refinery.]


Cuba has had another disastrous crop with production reported by the island’s government to be ‘the worst since 1905’. The sugar minister was promptly sacked. Although no firm data is available, t is thought that production was only about 1.1 million tons, well down on the 1.4 million tons produced in 2008/9, itself a very poor year.

Talk now is that the country will sell [give perhaps?] its industry to a foreign private sector company : strong medicine indeed for a communist government to swallow.


Tereos’ Brazilan company Guarani has purchased Unsina Mandu in Brazil’s North East region for $190 million. Mandu adds 3.5 million tons of annual crushing capacity to Guanari, taking it to just over 20 million in total.


India’s Shree Renuka Sugar may be having second thoughts about its proposed Brazilian investment which we reported back in March. It bought VDI in November 2009 and was reported to be willing to pay $329 million for 51% of Equipav in March. Now it is claiming that Equipav has too much debt to pay that amount.


The Ghanaian government is claiming that Cargill is setting up a 450 000 t/a thick syrup based refinery close to Accra. No technical details are available, nor has the source of the raw material been advised but construction of the plant, reported to cost $100 million, is due to commence this coming October.


Kenya’s privatisation of the remaining sugar industry looks truly stalled at a time when it was supposed to be complete. Some are arguing that a deal to sell at least 50% of each company would be against the 2001 Sugar Act [so why did the Mumias privatisation go ahead?] and the farmers are demanding to buy 100% [but where would they get the money from?]. The Kenya market will be open to all COMESA countries [and particularly The Sudan] in just 18 months time.


Illovo published its annual report last month and gave some interesting statistics. Mali also showed in the presentation : we understand that the project is back on, despite the company having pulled all of its team from in-country earlier in the year.

Malawi was again the star performer, delivering 42% of group profits. That is because Malawi is the least cost producer in the world with a recorded cost of $237 per ton in 2008/9. It consistently gets 110 t/ha, nowhere near the 130 t/ha recorded by Zambia but the sucrose content of the cane is so high.

The report also shows the impact of the Nakambala expansion with production rising from 194 to 315 000 and Zambia jumping from contributing 12% of group profit to 18%. This year it should finally achieve the predicted 440 000 tons output.


Syngenta has a new beet variety on trial that is resistant [rather than just ‘tolerant’ as in early varieties] to beet cyst nematodes. Whilst tolerant varieties maintain yields, resistant varieties should reduce nematode populations as well as maintaining yields on infested land.

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