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The news this month is quite widespread :
The world price settled gently during the first half of last month to re-establish at between 25 and 26 ˘/lb. Part of the reason seemed to be because Brazil is not doing quite as bas as previously thought and part was up-beat comments from Russia, Europe and other beet producers.
It looks as if the EU is set to abolish its sugar regime although nothing has been announced formally. Plans must be well advanced as the date is reported to be September 30 2016 : very firm indeed. The date is a year after the current regime runs out so it is to be expected there will be an extension without change until then.
The European beet crop is forecast to be good with possibly record yields – provided there is no repeat of last year’s freezing weather which left a substantial part of the crop rotting in the ground. France is predicting 94 t/ha at 16% sucrose and the crop was started a week early to ensure completion. Germany has stopped its pre-campaign reporting.
Interested parties are again pushing for a beet industry to be re-established in Ireland, five years after the last factory closed under the EU regime change. The talk is of a crystal sugar and ethanol plant with a capacity of 250 000 tons of sugar plus 11 million litres of ethanol and the cost being reported is €400 million [US$ 530 million]. After the regime ends in 2016 [see above] then Ireland – or, indeed, any other EU country – will be free to reintroduce sugar to its agricultural mix.
Turkey is again talking of privatising its state owned sugar industry. Of the 33 sugar factories in the country, 25 are still owned by Türkşeker, the company run by the government. The suggestion is that the sale will be in six regional groups so that buyers will get a mix of well and less well performing units.
The commission which advises the Indian government of the minimum cane price has indicated that there should be a 17% increase in that price to 170 per quintal [~US$ 35 per ton]. It is unlikely to have any great impact however as the millers have been paying substantially over the minimum set price in the last few years.
The EU has reaffirmed its ban on cooperating with the military dictatorship in Fiji, saying that its sugar industrial will not get any aid until the country returns to democracy. Note that the official line doesn’t apply to the private sector : Tate & Lyle Sugars [now ASR] has a lot of advisors in the country trying to secure its raws supply for Thames refinery.
The Canegrowers organization in Australia has revised downwards its forecast for the size of the current crop, roughly halfway through the season. Most of the problem seems to be related to last year’s floods and the cyclone that followed them although it seems that this year’s weather is also being disruptive. On the positive side, there is a lot of re-planting reported so next year’s crop should be good.
A month ago, the future of Proserpine, the last remaining co-operative in Australia, was uncertain as shareholders voted against the Sucrogen offer which meant repaying an Aus $ 15 million loan to Sucrogen. The first thing that happened was that Sucrogen extended its offer [and thus the repayment was avoided]. It then changed its offer in some minor ways [but still valued Proserpine at $115 million] which prompted Cofco to do the same [and still value the company at $120 million]. In essence a month of ‘no change’.
At the end of the month American Crystal was slicing beets with a contract workforce employed because the union employees were still locked out and picketing the plants. Two fires were reported although it is unclear what the origins of those were.
The US Corn Refiners Association is seeking approval to call HFCS ‘corn sugar’, a move which is strongly opposed by the sucrose industry. The FDA has now cautioned the CRA for already using the term before receiving approval. It will be interesting to see how this legal issue turns out.
The pressure on BSI has eased as the Dutch bank ING has extended its loan repayment deadline. It is reported that five entities are interested in buying BSI, one of which is the famers’ coop, and that the government is prepared to sell its 10% to the farmers ‘provided that terms and conditions can be agreed’. The only other entity which is known for certain is the Honduran Banco Atlantida
BSI, on the other hand, has stated that it is unconvinced about the ability of the farmers to raise the necessary money for the purchase of BSI shares.
CUBA REFORMS AGAIN
Cuba has scrapped its ‘Ministry of Sugar’ and is replacing it with 13 regional enterprises. During the reorganisation another five factories will be closed, leaving the island with 56.
Duckenfield estate in the far east of the island is continuing to invest in agriculture and seems to have a forward looking team in place. It has started to introduce new varieties from the Barbados research centre and is planning to start harvesting earlier. Let’s hope that the work returns the company to profitability at last.
Raizen, the new name for Cosan since Shell took control, has announced a development partnership with a biotechnology company called Codexis which will allow Codexis to use one of Raizen’s distilleries to test genetically manipulated yeasts designed to enhance conversion efficiency.
We reported in the July 2011 news that Cargill was buying in to a small Brazilian group. The venture is called SJC Bioenergia and it produces about 500 000 tons a year of sugar. It has now announced that it intends to increase its crushing capacity three-fold by 2020 although it is somewhat vague as to how this is to be achieved.
The Governor of Port Said Governorate has announced a new $400 million beet factory with an annual slice of 500 000 tbd. The investors are understood to be Egyptian but no details are available.
We reported on the start of the Omo Kuraz project in the July 2011 news. It now turns out that the six estates of that project are only part of an even more ambitious $4.6 billion plan to establish a total of ten new estates in the country by 2025. The country is aiming to be self-sufficent by 2013 and to be exporting 1.25 million tons by 2015.
Omnicane, the Mauritian sugar group in the south of the island, is to invest in the Kwale sugar project in south eastern Kenya. It will own 20% of the equity and will manage the company. We first reported the project in August 2009 and gave you more information in April 2010. The most important aspect of the project is its core estate, something which none of the current sugar companies have. Perhaps now, with foreign investment, the project will actually proceed.
The Ugandan Government has apparently sold the last 19% of the shares in Kinyara to RAI, the company which purchased the controlling interest when the company was privatised about 5 years ago. The legality of the transaction has been challenged but if it is indeed legal then RAI has accepted an obligation to invest a further $55 million and raise the capacity from 64 to 200 000 t/a and establish an electrical export station. What is less clear is whether the $55 million relates to RAI’s 70% or to the whole project. The other 30% is shared equally between the Bunyoro tribe, the outgrowers and the workers of the factory. It is unlikely that they could find equity to invest in the project.
Green Fuel Private, the ethanol project reported on here from time to time, seems to have started up. The question will be whether it can find enough cane to produce at capacity throughout crop.
Some interesting data came out from the Hippo Valley AGM last month. The factory should be able to produce about 300 000 tons a year : this year it expects to have recovered to a figure somewhere between 150 and 170 000 from a low of 88 000. It has implemented an accelerated plough-out programme but the extent of the problem can be seen from the report on the indigenous farmers : they farm 9 000 ha but only produce 465 000 tons of cane in an area where the average yield is 100 t/ha.