Sugar Industry News : July 2015


 

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WORLD PRICE

One could almost repeat last month’s item on the world price with New York continuing to hover around the 12.5 ¢/lb. The only difference is that US Climate Prediction Center has confirmed that El Niño conditions exist, that there is a >90% that it will continue into 2016 and an 80% chance that it will last into early northern spring that year.

WILMAR TAKES ANOTHER 460 000 TONS OF PHYSICAL

As we reported in May, when May closed at the end of April Wilmar took 1.9 million tons of physical sugar. Now, it has just taken another 460 000 tons as July closed at the end of June. One has to wonder what is going on.

OMAN SUGAR REFINERY

Well it seems as if the refinery in the port of Sohar towards the far north of Oman and looking across the Gulf of Oman to Iran may be going ahead. There has been talk of an Oman refinery from at least the mid 1990’s and we first reported on this latest proposal in May 2013. It is now reported that the promotors have signed a contract with China’s China Light Industrial Corporation for Foreign Economic and Technical Cooperation [CLETC] and that work is scheduled to start after Eid ul Fitr so late July this year.

One strange point however is that Tate and Lyle Process Technology is reported to be a ‘partner in the venture’ yet TLPT was shut down some time ago and no longer exists.

PROGRESS IN ETHIOPIA?

In April, the Ethiopian government announced that it was commissioning the Arjo Dedessa factory but it seems to have forgotten about that. Now it is claiming that it will commission Tendaho, Kesem and Kuraz in September, October and November and that will double the number of factories to six. True it has Wonji-Shoa, Metahara and Finchaa so what happened to Arjo Dedessa?

MUMIAS CONTINUES TO STRUGGLE

In March, Mumias was offered $11 million of ‘support’ from the Kenyan government but, to date, that has not been received. At the start of last month it was reported to be more shut than open as it couldn’t afford to buy the spares that it needs..

To make matters worse, the company’s cane cutters – all 18 000 of them – went on strike in the middle of June as they had not been paid and the national union of sugar workers called for the ousting of the Managing Director.

NZOIA SUGAR PRIVATISATION

Of the five sugar mills supposedly being privatised by Kenya, Nzoia has the best chance of success being the second largest in the country. However, the local government [Nzoia is in Bungoma county] is requesting that it leads ‘the revival of the company’. Surely that is a certain way of ensuring failure?

INDIAN PRODUCTION DATA

The Indian Sugar Mills Association has released data for the crop which started in Q4 2014. At the end of May the production stood at 28 million tons which will only change by a few 100 000 tons as the last factories closed during June. That would make it the largest production ever which explains, together with the low world price, why the country is expecting to have closing stocks of over 10 million tons at the end of September. Domestic demand is reported to be 24.8 million tons per annum.

No sooner had the current crop finished than the millers starting saying that they could not and would not start the next crop [in November] while the price of cane was not linked to the price of sugar. The domestic price is low with such high stocks and there is no point exporting when the world price is so low so next year’s losses, under the current regime, would be even worse than this year’s.

INDONESIA STARTS AGAIN

The Indonesian government has announced a new version of its strategy to establish ‘offshore’ sugar estates [that is to say ‘not on Java’]. It has allocated 500 000 ha of land for up to 10 estates in southeast Sulawesi [the ‘Chinese character’ island just to the east of Borneo], southeast Papua [the Indonesian half of New Guinea] and the Aru islands [offshore from Papua].

The difference this time, however, is that it is looking for foreign investors rather than running its own schemes. It claims to have 26 companies interested, 15 of which are described as sugarcane plantation companies. Anthony Salim wanted to develop two estates on Kepulauan, the main Aru Island, some four years ago but the project did not proceed at that time.

QUEENSLAND’S INTERNECINE WAR

In quick succession, Queensland’s big players, many of them now foreign owned, all announced that they were leaving QSL and selling their own sugar. What started out as a debate – should the cane growers have a say in how sugar is sold – has turned into a politicised fight, if not outright war, involving both state and national entities. There is talk of a mandatory ‘code of conduct’ which would allow the grower to decide how his 60% of the sugar was sold, a move which would essentially re-regulate the industry. If it is ‘his’ sugar then he shouldn’t get paid for it until he has sold it whereas if he has sold his cane he no longer owns any sugar.

NEW ZEALAND FIRM TO HELP FIJI SUGAR?

New Zealand lies between 36° and 46° south and doesn’t even grow sugar beet yet an agricultural consultancy from there is reported to be helping Fiji improve its cane yields. Interesting.

MEXICO SELLS FOUR OF ITS MILLS

In April we reported that Mexico had started to sell the last 9 of the 27 factories that it nationalised in 2001, wanting to raise nearly US$ 540 million.

Last month it reported that it had sold four of them : Atencingo and San Cristobal to Noroeste and Casasano and Emiliano Zapata to Beta San Miguel. The total raised was US$ 213 million. The government seems less sure about the rest, an official being quoted as saying that “we will review the best way to do it”.

SÃO MARTINHO BIASES TO CRYSTAL SUGAR

Brazil’s São Martinho group, which owns four factories, has announced that it expects to favour crystal sugar over ethanol in the current crop. Last year it’s ratio was 49/51 in favour of ethanol but this year it is expecting 52/48 in favour of crystal. Last crop saw a major increase in throughput [up ~20% to 18.7 million tons] and this year it expects to push that still further to 19.5 million tons assuming that El Niño doesn’t cause problems.