Sugar Technology
On-line News

September 2008

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Much of this and that this month :


The world price reached 15.75 USą/lb in the last week of August but then fell back from that peak : perhaps the second saw tooth we have seen this year. On the other hand, Guarani – the Brazilian part of France’s Terreos – is reported as saying that sugar needs to be at about that level to match the current return on ethanol.

In the longer terms things do look good : the ISO is currently forecasting a deficit of 3.9 million tons in 2008/9 as production in both India and Europe fall back : India by about 4.6 million tons and the EU by 2.9 million. The overall ISO production forecast is for 161.65 million tons [down from 169 million 2007/8] and the demand forecast is for 165.55 million [up from 161.75]. The ISO forecast was more or less mirrored by another one from Czarnikow.

Part of the rise was caused by speculation that the Brazilian South Centre had been badly hit by early rains which reduced sucrose levels and cut yields. It is also reported that 60% of this year’s crop to date in the Centre South has been processed through to ethanol, up from 56% last year. The ethanol sector is now so strong in Brazil that there is talk of building ethanol pipelines to transport the product out of the hinterland and down to the port at Santos.


The main players thinking of buying Ebro’s sugar division in Spain are becoming apparent. British Sugar is one of them. We now also know that the company made €80 million profit last year from a turnover of about €560 million : a basis for a preliminary valuation. Other names that have been mentioned include both Nordzucker and Sudzucker but surely Nordzucker will want to consolidate its acquisition of Danisco before moving to buy another such enterprise?


The 2008/9 campaign in Germany is expected to produce 3.5 million tons : nearly 800 000 more than that country’s EU quota. All of the surplus will have to be used for purposes other than sugar production. Ethanol producers are expected to take much of the surplus.


Turkey has announced plans to privatise its sugar industry. Twenty five factories are involved and they will be assembled into six geographically linked groups for the process. The announcement brought protests from some quarters of the country, not least the farmers.


A local company has announced a new sugar factory in Sri Lanka – but has then said that it will only invest $12 million although it is unclear whether that is the total price of the equity portion. Either way the capacity will not be great.


Following last month’s news item about Maryborough succeeding with its bid to buy Mulgrave, it has now announced a loss for the year ended June 2008. The loss is attributed to a poor season and a low sugar price.


Australia seems to have accepted that smut is now endemic in Queensland.


Following a meeting of the Pacific Islands forum last month, the EU swung its weight behind a forum resolution that Fiji must hold elections by next March. If there is no clear sign of progress towards that objective by October the EU will again suspend aid to the sugar industry. Not good news for Tate & Lyle which, as we have reported previously, is relying on 300 000 tons of Fijian sugar to put through Thames each year.


Unfortunately, last February's explosion has claimed its 14th victim with the death of one of the most severely burnt workers towards the end of August. He had only worked at the refinery for 4 months when the explosion occurred.


The reverberations of the state buy-out deal continued in August as it emerged that some of the land had recently been permitted for quarrying [and was hence valued more highly] and a local attorney filed a lawsuit claiming that the secret negotiations in the first half of the year broke Florida’s so called ‘Sunshine’ laws which demand open government.

At this stage, the State and US Sugar are still saying that they want to sign a contract by this November. Meanwhile, the first study of the economic impact of US Sugar’s closure has been published. The report, by the University of Florida [based in Gainsville FL], calculates that if US Sugar – including its large orange juice facility – closes then there will be 10,700 job losses and a loss of $1.65 billion to the state economy.


The Zimbabwean government [if there is such a thing, given the turmoil] has dusted off the much vaunted Chisumbanje project again. It sounds as if it wants to do it without building the proposed new dam this time : it is talking of taking water from the Osborne dam in the eastern highlands. There is little chance of the project happening at the moment though : it is looking for an off-shore investor to undertake the project.

Meanwhile, results of a study undertaken by the local research station show that the people given land on the farms from which the lowveldt outgrowers were ejected are not at all efficient : over 70% have a yield of less than 40 t/ha [only 12% achieve more than 60 t/ha in a location where 100 t/ha is not considered good] and nearly 60% have sucrose yields of less than 5 t/ha. Harvesting is no better with nearly 80% harvesting at more than 14 months old and over 70% taking longer than 4 days to deliver cane to the factory.

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