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November 2013

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It seems to be Africa's month but little else of note :


We stopped the presses on Friday October 18 to report the Copersucar fire in Santos as it was happening but we didn’t bring to you was the second fire which happened within days up country from Santos.

The final agreed figure for sugar lost in Santos seems to be about 180 000 tons of the potentially 300 000 tons being stored and what is left is reported to be, at best, ‘damp’. As the terminal was expanded recently to handle about 10 million tons a year, the sugar loss is relatively minor but the impact on out-loading will be considerable as it will take anywhere between 6 and 12 months to get the terminal operational again. Within the days after the fire Copersucar were saying that four employees had suffered minor injuries but that no one had been seriously hurt. However, we hear that at least one is still in hospital three weeks after the fire.

The second fire occurred on Tuesday October 29 at the Santa Adelia transhipment terminal some 400 km north west of Santos [up towards São José do Rio Prêto]. This is a much smaller terminal [28 000 ton capacity] but strategically important because it is/was a rail head for sending sugar down to the ports.


Well, what an interesting month. By October 17 the world price had climbed to 19 ¢/lb, up 1.5 ¢/lb from the September close of 17.5 ¢/lb. The next day it briefly hit 20 ¢/lb as news of the fire spread but it settled at 19.5 ¢/lb by the end of the day, still up 2 ¢/lb from the start of the month. However, by the end of the month it had dropped back to 18.5 ¢/lb :

World Price

It seems that, in general, the market has discounted the impact of the fire although other implications were noted : Al Kaleej are reported to have bought Indians [100 000 tons] for the first time in 2 years.


Cevital, the main Algerian sugar refiner, has been quoted as saying that it will invest US$ 6 billion in the Sudanese food industry. What is not clear is what sectors will receive the investment. Cevital is also a large oil seeds processor.


The Omo River has featured before on these pages as Ethiopia wants to build major irrigated sugarcane estates along it. The problem is that the river is the major source of water for Lake Turkana which, although partly in Ethiopia, is substantially in Kenya. The United Nations is now hopeful that a sustainable approach to the proposed third Gilgel Gibe dam will be agreed between the two countries soon. What is not yet clear is what impact that will have on Ethiopia’s sugar development programme.


Time was when we thought that Busia sugar would never be established but it was announced last month that a company called Africa Polysack had been granted a licence to build a factory there. The only problem is that the factory has been said to be rated to produce 1 000 tons of sugar … per month.


The government in South Africa has announced its intention to mandate biofuel use from October 2015 but it has not announced what level it intends to mandate. It has already announced that it will not permit fuels based on maize so that sounds good for sugarcane based projects.


The Indian millers are crying foul over the cane prices being imposed by the State governments, clearly a move to buy voters in advance of next year’s elections. They are saying that, as a result, the factory gate price is substantially below the cost of production. We could be seeing the start of a classic crash in Indian production : it is not that long ago that it went from about 26 million tons to 14 million tons in only 12 months.


The government in Thailand seems determined to go ahead with its plan to turn 1 million ha of rice lands into sugarcane lands. It recently assured the rice farmers that the millers would buy the cane but it should be noted that almost one third of the land is remote [>50 km] from a mill. Presumably there will be encouragement for the millers to develop new factories in those areas.


Aren’t politicians amazing? Indonesia’s Minister of Agriculture is sticking by his plans for self sufficiency by 2014 [the demand is about 5 million tons] when annual production in 2012 was only 2.6 million tons and he is short of 350 000 ha on which to grow the cane, never mind the factories in which to process it.


FSC has started construction on its Rarawai electrical export project. The station will be rated at 45 MW, presumably gross. No details are available so it is not clear, for instance, whether the station will operate only in crop, will store bagasse for an extended campaign or will operate say 330 days per year by using an auxiliary fuel.


At least we now know where some of the forfeited sugar is going : a company called Pacific Ethanol has bought 75 000 tons [metric] of sugar from the US Department of Agriculture. The price? [and remember this is refined quality sugar] 4 ¢/lb or $88 per ton.


In past editions of the news we have told you about the US Sugar Association's court case to stop HFCS makers from calling their product ‘sugar’. The Corn Refiners Association is now counter-suing on the basis that HFCS is nutritionally equivalent to sucrose and initial court hearings have found it’s favour, albeit only to the extent that the case should not be struck off but should proceed.


A row seems to be brewing about the bagasse at Tower Hill. The cane in Belize is exceptionally high fibre [up to ~20% at times] and for decades BSI has had a disposal problem. Now that it successfully runs Belcogen, an electricity export operation, the farmers are claiming they are entitled to ‘their share’ of the bagasse. They base this on a 2002 agreement which defines the sugar and molasses sharing arrangements between the company and the farmers. Your reporter thinks the company should shut down Becogen and force the farmers to take away their bagasse ….


Although not officially released, details of the next Guysuco five year plan [2013 to 2017] were freely available in the press last month. The information includes data on the last five years where the average production was 227 000 t/a and every year was loss making, including a loss of US$ 68 million in 2011. The plan itself is really just more of the same with a capital budget of 5 billion, 20% of which goes to Skeldon and 40% to Rose Hall.


Unica, which represents almost two thirds of the Brazilian industry is predicting a very good crop for 2013/14 with the centre south alone producing an estimated 587 million tons of cane. Most of it is expected to go into bioethanol. Field yields seem to be providing most of the gain with the average yield being nearly 84 t/ha compared to just under 76 t/ha in the previous year.