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No need to guess the dominant story [24.4 ¢/#!] :
What a difference a month makes! At the end of July we were reporting that the price was above 19 ¢/# and looked to be heading for 20, asking what happens next ‘as the forecasters are clearly out of touch’
By August 4th, one unfortunate trader in Paris was reported as predicting that the price would fall back to 18 ¢/# based on a technical analysis of the rate of increase in July. He described 19.73 ¢/# as technically significant as that was the highest price reached in recent times. Instead the price went well through 20 ¢/# and ended the month at 24.4, a value not seen for almost 30 years :
[We had to re-scale last month's graph as it stopped at 20 ¢/#.]
The ISO is now saying that it expects the price to hover between 20 and 25 ¢/# for the rest of this year. There seems to be consensus on the drivers so maybe that is correct. Most forecasters are predicting that India will import 3 to 4 million tons next year with the country still only producing about 17 million tons that year. Weather problems in Brazil are also oft quoted as a reason for the high price. The high world price will encourage Indian farmers back into the industry of course, so the system will ultimately be self correcting or, more likely, overcorrecting if past performance by the Indians is anything to go by.
One of the knock-on effects is that Egypt has cancelled a sugar purchase contract citing the high price as the reason.
Although the monsoon during the last week in August was somewhat above average, the overall picture is still very poor with most reporting districts being classed as 'deficient' and Hariana now 'scanty' with only 40% of the normal rainfall.
India has long seen cane poaching : factories offering incentives for delivery to them rather than the one next door. Now, with the expected shortage of cane due to farmers withdrawing plus the poor monsoon, at least 2 factories in Karnataka have started crushing 2 months early just to get the tonnage of cane without thought for the tonnage of sugar.
The Brooms Barn research centre has been warning UK farmers that this year’s warm wet summer has encouraged the ‘rapid development’ of rhizomania in the beet crop. Rhizomania [which literally means ‘crazy root’ is the result of a virus infection : an infected beet looks more like a good mop of hair than a nice plump root.
British Sugar has sold its Polish operation to Pfeifer & Langen so that it can concentrate on its UK and Iberian operations where it has a more dominant position. It purchased Ebro’s sugar division [and, more particularly, its 1.6 million t/a sugar market in Spain and Portugal] less than a year ago.
However, some analysts see the move as having more to do with preparing to buy CSR’s sugar division than with focusing on Europe.
Canegrowers, the organisation which represents all of Australia’s cane farmers is reported to be interested in buying into CSR’s sugar division. As reported here last month, it joins a group of major international players.
Maryborough has put in another bid for Tully, this time reportedly one worth Au$ 90 million. It is less than a year since its initial bid – which came to nothing – valued Tully at Au$ 110 million but those talks came to nothing.
Australia’s BSES, the cane agronomy research organisation is predicting that very few of Queensland’s varieties will not be smut resistant by 2012 thanks to pre-emptive work before smut arrived in the state in 2006. Perhaps some more thought needs to go into the ability of pathogens to develop too?
MUMIAS EXPORT COGENERATION
Mumias’ new 35 MW power station was commissioned last month so it should be more or less at its target of exporting 26 MW to the national grid. The company will get 6 ¢ US per kWh but it is unclear how stringent the PPA is with respect to security of supply, something which could very well eat into the profit from sales if the plant is less reliable than a utility station.
More information is becoming available on the cane project in northern Angola that we first reported in July. The estate, jointly owned by the state oil company Sonangol, Brazilian construction company Odebrecht and a private Angolan group, is reported to be a 30 000 ha plot. It is forecast to produce 280 000 tons of crystal and 30 million litres of ethanol annually. However, the reports also said that it would produce 217 MW of electricity so who knows whether the numbers are accurate or not?
ANGLO TO SELL TONGAAT
Anglo American has announced that it intends to sell its nearly 50% stake on Tongaat Hulett, probably through private placements. Presumably it is hoping that the world price will boost the revenue from the sale. Meanwhile, TH itself continues to be optimistic about its Zimbabwean operations. It has announced that it will spend about $20 million on those operations in the expectation of returning to an annual production of 600 000 tons within 3 years.
The Regional Governor seems to have other ideas though : he is promising the people now operating the land at Mkwasine [a sugar estate without a factory about 50km from the factories] that the government intends to buy ‘mini-mills’ from China for them.
Guysuco has reported a loss of GY$ 4.3 billion [US$ ~ 21 million] for last year, blaming ‘persistent labour strikes and heavy rains’. With production at about 226 000 for the year, that is a loss of over US$ 90 per ton of sugar in a scenario where a large part of the production is sold into the EU at concession prices.
One cannot expect things to improve either as the announcement coincided with more strikes by cane cutters across the company and, of course, the EU is cutting its buying price in response to the WTO finding against its sugar regime.
GM BEET ‘ESCAPES’
The focus of transgenic beet genes entering the wild population has previously been on the odd plant flowering before harvesting but that overlooks the need to produce seed in the first place. This spring it seems that a careless beet seed farmer in Oregon sold some soil which contained transgenic beet seeds for garden use in compost. Beet seedlings started to grow in local gardens …