Sugar Industry News : June 2015
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The world price has continued to bump along the bottom in the 12.0 to 13.5 ¢/lb range although it did briefly push up to 13.6 and also briefly dropped below 12.0 last month. Platts' Kingsman has announced its view of next year’s expected deficit as having changed from about 5 million tons to just 460,000 tons : not good news for a price increase.
In the meantime, the US Climate Prediction Center is predicting a ~90% chance that El Niño conditions will continue through the northern summer this year and a > 80% chance that they will last throughout the year. El Niño events normally disrupt sugar production around the world so, just maybe, there is hope.
NIGERIA OPENS SEED CANE FACILITY
Amid much self-congratulation, Nigeria has opened what it hopes is the first of five ‘Sugarcane Bio-factories’. It seems that this is a new name for a seed cane development unit, possibly using tissue culture. The objective is to produce a million seedlings per annum but one suspects that they mean plantlets.
SOUTH AFRICAN STRIKE AGAIN?
Last year’s pointless strike in South Africa – the 10% pay award was nothing like the rise that was demanded – resulted in only a 12 month agreement so there is now talk of striking again. From what we understand the unions are looking for another rise of about 10% but, in round numbers, the companies are only offering half of that.
BAJAJ HINDUSTHAN LOSSES
Bajaj Hindusthan might be the largest sugar company in India [at 136 000 tcd across fourteen factories it claims to be the largest in Asia] but its results for Q1 2015 look disastrous : the company made a loss of US$ 84 million on a turnover of $ 184 million. Compared to the same quarter in 2014, the turnover was down 11% and the loss was 27% higher.
MITR PHOL WITHDRAWS FROM CAMBODIA
Mitr Phol has reportedly withdrawn from its Cambodian sugar projects although the company itself is silent on the issue. The group was granted three sugar concessions by the Cambodian government in early 2008. All three are in the far north of Cambodia, close to the border with Thailand. The combined total was almost 20 000 ha of land, land which some claim was not the government’s to give and hence the group was involved in ‘land grabbing’ even though it was not, the government was if the claims are correct.
YELLOW CANOPY SYNDROME
Queensland is becoming more and more concerned about Yellow Canopy Syndrome, an issue that mentioned in the review of the country three months ago. It first appeared in 2012 in the northern part of the state but has now spread as far south as Mackay although the cases down there are currently categorised as slight to moderate. The problem is that the pathologists have not yet been able to identify the cause even after all this time.
COFCO AND TULLY
It is now four years since China’s COFCO purchased Tully Sugar in Queensland. Now Alick Osborne, brought in from Louis Dreyfus to run the business, is leaving and not being replaced. Coincidentally, that news broke at the same time as COFCO’s joint venture with Noble [Noble Agri but actually controlled by COFCO] announced the appointment of new CEO Matt Jansen who joined from ADM. Is COFCO lining up Tully to be part of Noble Agri?
HIGH TECHNOLOGY AGRICULTURE FOR FIJI?
FSC is reported to be turning to high definition mapping using UAV’s [drones] as a first step to creating a geographic information system. Whether high technology will solve the problems of FSC is a completely different question.
ADM LOSES APPETITE FOR SUGAR
Archer Daniels Midland, one of the giants of the trading companies and based in Illinois seems to have lost its appetite for sugar. The head of sugar trading, based in London, has left having only moved to ADM from Bunge about three years ago. The company is also reported to be trying to sell its Brazilian factory.
WESTERN SUGAR RATIONALISATION
Western Sugar, the beet cooperative based in Denver CO, intends to stop beet processing at Torrington by expanding production at Fort Morgan and Scottsbluff. At the same time it will be looking to improve energy efficiency at the two sites.
Raizen, the Shell/Cosan joint venture has reported a 10% drop in 2014/15 crystal sugar production with ethanol only up 1%. It blames the results on the drought which reduced sugarcane availability but that is not the full story as Brazil has still not reached a stable position in the transition from an every expanding industry with high plant cane ratios to a mature industry managing its crop well.