Sugar Industry News : August 2015
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After pausing for a couple of months, the world price continued its descent during July, closing the month at only 11 ¢/lb and showing every sign of falling lower. We must surely be into a serious game of poker now with none of the world's factory owners wanting to show his cards but once someone folds, a lot will fold.
EU FORECAST DOWN
The 2015/16 beet crop in Europe is forecast to be 17% lower than the previous year but for mainly commercial, not technical, reasons. Last year’s yields were exceptional so, although this year is expected to have a yield above the five year average it will inevitably not be as good as last year. The price paid to farmers, on the other hand, has been falling steadily and so the land sown to beet is already known to be 100% lower than last year.
MUMIAS WELCOMES BACK ERROL JOHNSTON
Mumias has at last received its promised cash injection and has appointed Errol Johnston as its CEO [which was probably a condition precedent to getting the loan]. Errol used to be the MD of the company in the days when it was still run by Booker Tate. He left in 2001.
MAHARASHTRA ESTIMATES LOWER PRODUCTION
Maharashtra, with over 1 million hectares under cane, is the state with the largest production in India but it is suffering from a drought at this stage of the monsoon so the Indian Sugar Mills Association is predicting a 7.5% drop in the next crop which will start in November. In contrast, Uttar Pradesh – the second largest producer – is predicting a modest increase at the moment.
THAI FORECAST DOWN
The Thai Sugar Millers Corporation [TSMC] is forecasting a smaller than normal crop for the 2015/16 year which starts in November because the country’s cane growing areas are suffering from a drought. The earlier government estimate was 111 million tons of cane and hence about 11 million tons of sugar. TSMC is now forecasting 80 to 100 million tons.
AUSTRALIA HOPES FOR ITS FIRST PREFERENTIAL MARKET
Australia has always been proud of its full exposure to the world price and has been relatively secretive about its technology and its cost structure. It is now admitting that US 11.5 ¢/lb is below its cost of production and hoping that the current Trans-Pacific Partnership negotiations will result in having access to the US market. That sounds doubtful somehow.
BARBADOS INDUSTRY THREAT
The largest cane grower on the island, a corporation called Barbados Farms, is threatening to stop growing on the ~800 ha that it plants to cane because it has made a loss in the last five consecutive years. The general view is that if it does withdraw then the industry will immediately collapse. The government is trying to avoid that happening but perhaps it has already accepted the inevitable : it introduced a tax on ‘sugary drinks’ last month, supposedly for health reasons.
BSI HAS RECORD YEAR
The reorganisation that emerged from the bitter days when crop should have started last year since to have been good for Belize. Regular readers will remember that the farmers split into three separate associations as many became disillusioned with the previous monopoly. Yes, crop started very late and inevitably there is standing cane but the factory was kept open an extra two weeks to minimise that and the production was a record 142 000 tons because quality was so much improved with reduced cut to crush times.
IOGEN ENERGY OFFICIALLY OPENED
The $100 million cellulosic ethanol facility of Iogen Energy, a Raizen /Iogen joint venture at Raizen’s Cpsta Pinto factory was officially opened in July by Brazil’s President. Iogen is a Canadian company which uses enzymic hydrolysis. A description of the technology is available online.
Raizen has previously stated that it if this facility is successful [and presumably it is for the President to be called to open it] it would roll the technology out at another seven of its factories by 2024, by which time it expected to be producing 1 billion litres/annum of cellulosic ethanol.
MAN WANTS 100% OF IANSA
ED&F Man has owned just over 60% of IANSA, owner of the beet factories in Chile, for quite a few years but has always let the company operate as it saw fit. Man, perhaps bolstered by itself now being 25% owned by Sudzucker, has now announced a purchase of the remaining IANSA shares at a premium to the market price.