Sugar Industry News : November 2016
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The world price was again pushing at 24 ¢/lb but by the end of October it had dropped back a bit :
The messages continue to be very mixed with Brazil weather dominating [will the crop be stopped early by the rains?]. Only time will tell.
ASR REVEALS ITS HAND POST BREXIT
Following our comments in the August news this year, ASR – owners of Tate & Lyle sugars – has been commenting about the future of Thames refinery and revealing its current woes. The company has confirmed what was already common knowledge : the 1.1 million t/a refinery is running at half capacity. It has now confirmed a € 25 million loss for 2015 alone. It is now relying on a 'hard' Brexit with an open sugar market in the UK.
FRENCH CROP REPORTED DOWN
The Ministry of Agriculture in France is predicting a poor beet campaign due to the wet spring which caused growth delay and outbreaks of disease. Even though the sown area was higher than last year, the poor yield is expected to result in only a little over 32 million tons of beet in 2016/17, the worst since the disastrous 2010/11 campaign.
EGYPTIAN SUGAR SHORTAGE AN ECONOMIC PROBLEM NOT TECHNICAL
Last month Egypt's sugar shortage problems hit the headlines when the police seized the stock of a cake manufacturer because the government introduced anti-hoarding regulations. [It took three days to sort out the mess.] It seems that the real problem is the shortage of forex which leads to a black market coupled with the high world price so traders cannot afford to buy sugar. The government has now stepped in to buy sugar to ease the problem until the beet crop starts to deliver.
KENYA GETS YET ANOTHER EXTENSION FROM COMESA
Unbelievably, last month the African common market COMESA granted Kenya another two years extension of its sugar exemption, to take effect when the current one expires inQ1 of 2017. We have lost count of how many extensions the country has been granted and equally lost count of how many promises it has made to privatise its remaining state owned factories.
THAILAND TO REFORM ITS SUGAR INDUSTRY
Thailand's cabinet is reported to have approved a radical restructuring of the country's sugar industry with talk of the current 70:30 profit-sharing system being abolished. The move seems, at least in part, to be in response to Brazil's complaint to the WTO about unfair competition.
CHINA'S FIRST STOCK SALE COMPLETES
Following the prediction in last month's news, China sold 200 000 tons of its sugar stocks at the very end of October and for prices just over $1000 per ton, about 15% above the reserve price set by the government. The high price is reported to be a result of the lack of readily available sugar in the local market because the first sugar from the beet crop is not yet available.
ABDUL KHAN LEAVES FSC
Abdul Khan, the Chief Executive of the Fiji Sugar Corporation since 2011, has abruptly resigned – citing ill health. Until July this year he was also the Chairman of FSC but the government replaced him with a non-executive Chairman from the banking sector.
GUYANA TO RECEIVE MORE EU FUNDING
It seems that Guyana is being brought back in from the cold, having lost its EU funding when the then President prorogued the state parliament in November 2014 to avoid a vote of no confidence. [He lost the subsequent elections in mid-2015.] The EU has agreed to hand over € 24.4 million [about US$ 31 million] from the fund set up to help ACP countries cope with the sugar regime change.
WILMAR AND RAIZEN JV CONFIRMED
In January this year we told you that Wilmar and Raizen were considering a joint venture of some description. Last month the two companies finally confirmed that this was the case and that it was to be a 50/50 venture to market Brazilian sugar starting from the 2017/18 year.
PETROBRAS SELLING ITS STAKE IN GUARANI
Petrobras, the semi-public sector Brazilian Petroleum Corporation, owns about 45% of Guarani, the third largest sugar group in Brazil. Guarani is controlled by the French cooperative Tereos and has seven factories in the country with a total installed annual crush of 23 million tons.
Petrobras seems to have taken a decision to divest from all biofuel activities, one of which is Guarani. Its problem, though, must be Tereos which is essentially a monopoly buyer, either directly or through a partner nominated by it.