Sugar Industry News : July 2016
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The world price again continued to climb strongly in June and closed the month not far below 21 ¢/lb, a truly amazing 28% gain in two months. The real started to turn up too :
There seems to be a general expectation that we will soon see a technical correction, perhaps because those sorts of gains will encourage the investment funds to sell off. However, everyone is forecasting a large deficit for the current year - ranging from 4 to 9 million tons - and another for 2016/17 - with a range of 4 to 8 million tons.
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?
KOMENDA FACTORY HAS PROBLEMS
The refurbished – or perhaps replaced would be a better word – Komenda factory in Ghana was inaugurated by the country's president at the very end of May. Two days later it was shut down for a 6 month 'maintenance period'. Some reports suggest that it was inaugurated right at the end of crop so now is off-crop and others say that the site is not connected to the national grid so cannot operate???
TANZANIA [COMESA?] TO INCREASE IMPORT DUTY
The government of Tanzania has announced a phased increase in the import duty on sugar with annual 5% increments from the current 10% until 25% is reached in the 2018/19 fiscal year. It stated that the action would taken in 'all East Africa partner states' so this is presumably a COMESA decision?
TANZANIA TO HAVE SMALL NEW FACTORY
There is a private sector initiative in Tanzania to establish a small new factory to the north of the Kilombero factories to service growers there that would otherwise have to truck their cane the ~ 70 km to Kilombero. It is reported that the factory will initially produce just 150 t/d of sugar but will be capable of expansion to produce 500 t/d so it is probably based on the Indian cooperative model.
RWANDA TRYING AGAIN
Kabuye sugar estate in central Rwanda, owned by Uganda’s Madhvani Group, struggles to survive [it only produces 12 to 14 000 tons and was closed for a period two years ago when floods destroyed half the crop]. The government is again saying that 'a Mauritian group' will be investing in a new estate on a 10 000 ha estate on the country's eastern border with Tanzania so about 50 km from Lake Victoria's western shores. However, it was October 2012 when we first reported this potential project so will it happen?
NAKAMBALA REFINERY IN COMMISSIONING
Zambia Sugar, now part of ABF Sugar, has confirmed that it has 'partially commissioned' a new refinery at Nakambala. It stated that the new facility would more than double refined sugar production from 40 000 t/a to 90 000 t/a.
ZIMBABWEAN PRODUCTION DOWN
Tongaat Hulett has reported production down 11% in the 2015 Low Veldt crop with only 204 000 tons of sugar made. The problem seems to drought related and as last [southern] summer's rains were not good the situation may not improve soon.
INDIA INTRODUCES 25% EXPORT DUTY
In October last year India introduced compulsory sugar export requirements and only in last month's news we reported that it was scrapping those requirements. In June, just eight months on, the government announced that it was going to impose a 25% levy on sugar exports due to the decline in production as a result of two poor monsoons. What is definitely worthy of note is that this year's monsoon was a week late starting and was 13% down on the average at the end of June.
AUSTRALIAN CROP DISRUPTED AT START OF SEASON
The central Queensland crop had hardly got going – Plane Creek had not even started crushing – when unseasonal rain stopped play in mid-June. Crushing re-started some two weeks later which will inevitably push the end of crop back towards the rains of next season. Let's hope that there is no standing cane when they arrive.
BAGASSE FIRE AT MILLAQUIN
Bundaberg's Millaquin factory suffered a serious fire in mid-June, just three days before it was due to start crushing for the 2016 crop. The factory was expecting a two week delay as a result of the fire. The initial thoughts from the GM were that the fire started when embers from a boiler ignited bagasse on a conveyor but it seems that Millaquin is just finishing the construction of a new bagasse silo so one has to wonder whether the construction work was not involved somehow?
FLORIDA DATA NOW AVAILABLE
Following on from last month's news item about the record crop in Florida it seems that was large but not a record in absolute terms. 170 000 ha of crop land was harvested, producing 17 million tons [metric] of cane. From that 1.95 million tons [again metric] of sugar was produced. What was a record was the length of the crop to a large extent caused, as discussed last month, by the mid-crop rains.
CUBAN CROP DATA STARTING TO APPEAR
We reported a poor crop for Cuba in April and although AZCUBA has declined to release any data it is becoming clear that the crop produced only 1.6 million tons compared to the 1.9 million of the previous crop. The company's original budget for this crop was 2.6 million tons. The overall yield has been stated to be only 4 tons of sugar per hectare.
FROME OUTPUT COLLAPSES TO JUST 27 500 TONS
Data released by Jamaica's Sugar Industry Authority shows that Frome factory – supposedly the best of the factories purchased by China's COMPLANT – produced an all-time low 27,507 tons of sugar in the crop that has just finished against a budget of 40,000 tons. Perhaps worse, the TCTS reported was almost exactly 14.5.
Nonetheless, the government of the island has stated that it has no intention of abandoning the sugar industry, mainly because it is said to employ 50 000 people.