Sugar Industry News : August 2017
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With Independence Day many Americans take holidays so the market was quiet but it did manage to show a bounce from the previous low, closing the month close to 15 ¢/lb :
The big question is whether it will continue to recover in August or fall back in the doldrums?
ENGLAND'S 30% BEET INCREASE ON TRACK
British Sugar has confirmed that it is on track to harvest from 30% more land area in the campaign soon to start compared to last year. Sucden estimates that there will be a 15% increase in area across the entire EU and with Tereos reporting a 25% increase that means that some countries will be significantly below the average.
AL KHALEEJ YORKSHIRE?
It seems that Jamal Al Ghurair's latest scheme is, according to the Yorkshire Post, a beet sugar factory in northern England. The site is right next to the A1(M) motorway between York and Harrogate. The problem is that it is only two kilometres from Allerton Castle, a gothic revival stately home. No technical information is available but the cost is reported at £350 million and it is said that it will support '3,500 farmers'.
JIGAWA FACTORY AT LAST?
There has been talk of a sugar factory in Nigeria's northern Jigawa state for at least a decade but maybe it is finally happening. A relatively new company called Crystal Sugar, which doesn't seem to have any other operations, has signed a contract with KETS for a 1500 tcd factory to be operational in 2019. Watch this space!
TONGAAT OPTIMISTIC ABOUT ZIMBABWE
The CEO of Tongaat Hulett has presented a rosy picture for its operations in Zimbabwe next year. He has three reasons for hope : the Tokwe-Mukosi dam [the one which nearly collapsed during construction some three years ago] is now operational, the company has signed a power supply agreement and [most surprisingly] Mugabe has told his people not to interfere with TH property. He predicted a crop of 440 000 tons in 2017/18 and 570 000 in 2018/19. Let us hope that that comes true.
IRAN CLAIMS SELF-SUFFICIENCY IN FOUR YEARS
The Iranian government, celebrating a record 1.65 million ton 2016/17 crop, has claimed that the country will be self-sufficient in four years' time. The country consumes between 2.2 and 2.4 million tons so there was still a 600 000 ton shortfall in what was a record year : it doesn't seem plausible that balance will be achieved in four years.
PAKISTAN CONTINUES TO ALLOW EXPORTS
The Pakistani government has been steadily issuing sugar export permits in 2017 as the country made nearly 1.5 million tons of surplus sugar. Last month it again issued approval for a further 300 000 tons of export, having decided that the exports were not forcing up local prices [but the surplus was delaying cane payments].
INDIA STILL SHORT OF SUGAR
At least one local commentator is challenging the Indian Sugar Mills Association [ISMA] view that the country doesn't need to import any more sugar. SP Tulsian is a claiming that Septembers closing stocks could be as low as 2.3 million tons based on this year's consumption being 24.8 million. The crop only starts in November so India will have to get by for about two months on whatever the closing stocks are [and the festival of Diwali is in October].
He also predicts that, at best, the country will be in balance for the 2017/18 crop so the September 2018 closing stocks will again be only 2.3 million tons.
WILMAR RESCUES SHREE RENUKA
It is reported that Wilmar will inject US$ 120 million into Shree Renuka, thereby increasing its stockholding from 27 to 38%. The company hopes that the move, coupled with the sell-off of its Brazilian factories will stabilise its balance sheet.
CUBA MISSES BUDGET AGAIN
Cuba doesn't give precise figures but it has reported that the crop that finished earlier in 2017 was 300 000 tons of raws below budget even though it was 20% higher than the 2015/16 crop. As usual, the blame was placed on the weather [drought this year], human resources and a lack of spares.
BRAZILIAN INDUSTRY IN DEEPER PROBLEMS AGAIN
The general view of the Brazilian industry is gloomy with the world price not much above the cost of production and ethanol depressed because the oil price is also low. One estimate of the industry's debt is over $26 billion. As discussed above, Shree Renuka is looking to sell at least some of the four factories that it owns in Brazil but there are so many factories up for sale and few willing buyers.