Sugar Industry News : June 2016
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The world price continued to climb strongly in May and closed the month above 18 ¢/lb, an amazing 12.5% gain in a month. The real could not keep pace :
Last month we queried whether the upward surge could continue - after all, January closed below 13 ¢/lb and last August we were testing 10 ¢/lb - but surely the surge cannot continue? There are several factors which could bring it back down : if the monsoon that is about to start is good then Indian production expectations will rise again; if the rains in Brazil now hold off then the same would be true of Brazil.
On the other hand, given the remarkable apparent link between the sugar price and the real, should we be betting on a surge in the value of the real?
LATEST ISO FORECAST PUTS 2016 GLOBAL STOCKS AT ~ 80 MILLION TONS
ISO is expecting the global sugar stock level to be ~ 80 million tons at the end of September when the 2015/16 sugar year ends. That implies a current year deficit of 6.65 million tons. It is expecting next year to also be a deficit year, albeit only 3.8 million tons short of balance. Although a stock of 80 million tons sounds a lot, it is less than 6 month's consumption.
ASR FINALLY ADMITS THE PROBLEM OF THAMES REFINERY
American Sugar Refiners, owners of the Thames Refinery in London, have finally admitted that the EU regime change will spell the end of refining at the site, about 140 years since the first sugar was refined there. In a Nasdaq article last month, Gerald Mason – VP for EU Affairs & Strategy – was quoted as saying that 'the clock is ticking', confirming that Thames will not be competitive after the regime change as things currently stand.
LAFIAGI SUGAR INAUGURATED
The BUA group, operator of the smallest of the three refineries in Lagos, has inaugurated a sugarcane project at Lafiagi in Nigeria's Kwara state, some 200 km due west of Abuja in the Niger valley. The claim is that the US$ 150 million project will produce 140 000 t/a of refined sugar [the factory is reported to be designed for 7000 tcd], 25 million ℓ/a of ethanol and generate 'over 35 MW of electricity'. The company is also claiming that it has started to acquire land for its second such project in Kogi state to the south of Abuja.
INDIA SCRAPS COMPULSORY EXPORT
Last month India announced that it was scrapping the subsidised compulsory export scheme that it introduced a few months ago, another sign of continuing poor production figures ahead. The consensus is that the next crop, starting in Q4 2016, will produce about 24 million tons with demand at about 26 million and stocks at about 7 million.
ABF WANTS TO SELL OUT OF CHINESE SUGAR
AB Sugar, owner of British Sugar and Illovo among others, has reportedly put its sugar business in China up for sale with a price tag of US$ 1 billion. The company closed most of its beet operations in the north east but still runs two factories and it has five cane factories in Guangxi Province. Total production is about 800,000 t/a.
Meanwhile, in late May the company received approval from the Illovo minority shareholders for the acquisition of the shares not currently owned. The deal is expected to have closed by the end of June.
QUEENSLAND ROW CONTINUES
The row over the new legislation which gives growers a say in how the product sugar is sold continues unabated. Following our report last month about the Wilmar contracts not even being on the table for discussion until the end of June, it has been estimated that somewhere between 50 and 70% of growers do not yet have contracts.
FLORIDA HAS RECORD CROP
Despite having a bad time of it in mid-crop when crushing was stopped for unseasonal rains, Florida looks to have had an extremely good crop. The mid-crop delays pushed out the end of crop into mid to late May so there were further rain delays at the end of crop. The official data is still awaited but the unofficial version is that USSC, for instance, has crushed more sugarcane this crop than it ever has.
CUBA'S HARVEST EXPECTED TO BE DOWN
Like Florida just to the north, Cuba had unseasonal rains in the crop just finishing and few of the factories have achieved their budgets. There is no official data available yet but the consensus is that production will have been about 1.6 million tons, only 85% of last year's production.
CHINESE TO PULL OUT OF JAMAICA?
There are unconfirmed reports that the Chinese owner of the major part of the Jamaican industry – Frome, Monymusk and Bernard Lodge – want to get out of the industry, only a few years after buying it from the Government. Even at the time of the purchase it was reported that China only did the deal because it wanted to build a major alumina export terminal on the island.