Sugar Industry News : October 2017
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Welcome to the new world of sugar : the EU sugar regime has just come to an end and that means that it can again freely export on the world market.
As can be seen above the market was relatively quiescent this last month as people tried to come to grips with the many conflicting signals being bounced around : watch this space!
SOME EUROPEAN BEET CROP FORECASTS PUBLISHED
Some four months ago there were concerns about the impact of weather events on the European beet crop but the French and German forecasts published recently seem to show that the crop was not affected. The German sugar industry association is predicting 31.5 million tons of beet [up about 27% from 2016/17] but only a 23% increase in crystal sugar [to more or less 5 million tons] which implies a drop in sugar content.
The French government is predicting 40.5 million tons of beet which is an increase of 16.7% over 2016/17 but we have not yet seen a sugar production forecast.
UKRAINIAN BEET DATA PUBLISHED
The Ukraine uses a September to August sugar year so data for the 2016/17 year is available. Sugar production was around 2 million tons and exports were nearly 770 000 tons even though domestic demand is about 1.5 million. Last year's exports were only 132 000 tons. The figures don't stand comparison with the figures from the days of the USSR when the Ukraine was the 'bread basket' of that state and produced 5 million tons of sugar.
KENYA IMPORTED 300 000 TONS IN AUGUST
Following last month's article on a tariff-free window for non-COMESA imports, it has now emerged that Kenya imported 300 000 tons of sugar in August, mainly from Brazil. The tariff-free window was closed at the end of August. It is reported that the average price paid was US$ 400 per ton compared to about $700 per ton for COMESA imports.
MAURITIAN OUTPUT CONTINUES TO FALL
The latest production forecast in Mauritius is down again to just 350 000 tons, just 90% of the last crop. The problem this year seems to be weather related [excessive rain and reduced insolation] but the decline seems inexorable with the industry reportedly down to just 1% of the GDP.
PAKISTAN APPROVES 500 000 TONS OF SUBSIDISED EXPORT SUGAR
Last month the government in Pakistan approved the export of 500 000 tons of domestic sugar with a subsidy of about US$ 100 per ton. It will be interesting to see what the WTO makes of that. The country is reported to have stocks of about 2.8 million tons. The PSMA [millers association] wanted approval to export about half of that stock.
INDIA APPROVES ANOTHER 300 000 TONS OF IMPORT
The Indian government authorised a 300 000 ton second tranche of imports in mid-September [at a concessionary 25% duty] to shore up the country's stock. That had not landed as the old year closed with a just 4.7 million tons closing balance.
That is about 2.5 months of the typical demand pattern but Diwali – the high sugar demand period – is less than a month away and the first mills will only be starting up in November. The country will essentially be 'running on empty' before the first of the 2017/18 sugar hits the market place. The government has reportedly asked the factories to start early. Presumably it doesn't understand the impact that would have on the farmers, their yield and their fields.
INDIA FIRMING UP ITS 2017/18 FORECAST
The federal government in India is predicting a production recovery to 25 million tons in the year just started – but with a caveat as the UP state government prediction data is being questioned. UP was not hit by the poor rains like the other major sugar producing states but it is predicting a nearly 1.5 million ton increase from the 8.77 million production of 2016/17.
The overall efficiency of the Indian industry can be judged from the Ministry of Agriculture's data which is predicting about 338 million tons of cane to produce the 25 million tons of sugar although some of the cane will go to non-centrifugal sugar production.
TROUBLE STIRS AGAIN IN QUEENSLAND
The sugar code of conduct was imposed on the Queensland industry some months ago as a way of sorting out the QSL debacle. It allows growers to choose who sells the sugar from the cane that they sold to the millers. A Senator from New South Wales has now introduced a bill to have the code of contact disallowed, much to the annoyance of the growers' association.
US WEATHER EVENTS IMPACT CROPS
This [northern] summer has seen two weather events which impacted sugar production.
Hurricane Harvey and its remnant hovered over Texas for a long time before moving slowly over Louisiana, dumping a lot of rain all the while. It is not clear what impact, if any, it had on the Rio Grande crop which would have been on the southern fringes of the hurricane as it made land fall but it certainly stopped the planning of seed cane in Louisiana. Hopefully that state will now have enough dry weather to complete the task.
The eye of Hurricane Irma and its remnant travelled up the west coast of Florida but that still put the cane area in the path of the associated winds which are stronger on the east and north of a northern hemisphere storm. Over 100 000 ha of crop will have experienced winds in excess of 180 km/h so extensive lodging is being reported. In addition, the amount of rain dumped will have flooded many fields, again something being reported. No firm data is yet available but losses are expected to run to several $100 million.
CUBA REPORTING IRMA DAMAGE
Azcuba, the island's national sugar company, is reporting that hurricane Irma flattened at least 338 000 ha of cane and inundated another 92 000 ha. The eye of the hurricane tracked somewhat to the north of the northern coast in early September. It is reported to have damaged more than 20 sugar factories but the damage does not sound too serious. Azcuba is stating that the crop will start on time next month but that it will be 'somewhat complicated'.
PAN CARIBBEAN CONFIRMS IT IS DUMPING MONYMUSK
Chinese owned Pan Caribbean Sugar [PCSC] purchased Frome, Monymusk and Bernard Lodge from the Jamaican government eight years ago and has been bleeding ever since as it struggled to turn the operations to profit, investing some $250 million. As far as we know, Bernard Lodge factory doesn't operate and Monymusk operations were suspended in 2016. PCSC has now confirmed that it will not operate Monymusk factory ever again but that it is actively looking for a buyer. Given the state of the industry and external buyer is unlikely and the government probably doesn't have the appetite to renationalise.
ABENGOA BIOENERGY FILES FOR PROTECTION IN BRAZIL
The Brazilian arm of Abengoa's Bioenergy division has filed for bankruptcy protection after failing to find new investors to inject fresh capital. The company crushes about 7 million tons of cane a year in two large caneflex factories and a more or less 'toy' factory at a third location.
Abengoa is a large Spanish conglomerate that has itself been struggling for years and its US operation has been in Chapter 7 too in the past.