Sugar Industry News : December 2015
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WORLD PRICE
The world price seems to have stabilised for now and the Brazilian real continues to follow :
There is talk of rain in Brazil but the crop seems to have been completed without too much difficulty. The only other possible influence is the talk of a European crop some 5 million tons down on last year [see below].
EU PRODUCTION SUBSTANTIALLY DOWN
It looks as if the current beet campaign in the EU will see much lower production that last year [albeit a very high production year]. The consensus seems to be a production of about 14 million tons for 2015/16 compared to about 19 million last year. Part of the reason is a sharp reduction in sowing but poor conditions have contributed to the problem in France and Spain. Some of the Spanish factories have not even started slicing yet when they would normally be two months into the campaign at this stage.
SUDAN STRUGGLES WITH IMPORTED SUGAR
The Sudan has a domestic demand of about 1.5 million tons and a local supply of 850 000 tons so it needs to import about 650 000. The problem is that it is actually importing about 1.2 million tons since the government abolished the duty on imports so something like 550 000 tons in leaking across its borders, probably to South Sudan and Chad.
ETHIOPIA PREDICTS EXPORTS IN 2016
The Ethiopian Sugar Corporation is predicting a swing from the country being a net importer to being a net exporter in 2016 as the Tendaho and Kessem projects come on line. Tendaho is in the north of the country but Kessem is just downstream of Metehara in the rift valley.
ILLOVO STARTS PREPARING FOR POST 2017
AB Sugars’ Illovo has laid out its thinking for post 2017 when the EU regime changes again [and perhaps British Sugar competes with its own sibling]. It takes the view that demand in Africa will grow at a faster rate than anywhere else in the world and it is that market which will replace its traditional market for Moçambiquan, Zambian, Malawian and Tanzanian.
INDIAN EXPORT TARGET UNLIKELY
We reported last month that India wanted to export about 4 million tons in the 2015/16 year. It seems that this will not be achieved by a long way : by the end of November contracts for only 200 000 tons of exports had been signed. As one might expect the millers are saying that it just won’t happen without export incentives.
INDIA SUBSIDISES GROWERS
Last month India – one of the countries which took the EU to the WTO – introduced an INR 45 [US $ 0.68] subsidy per ton of cane to cane farmers. The government has said that millers may deduct the same amount from the amount that they pay the farmers.
SUGAR AND HFCS
There has been a simmering dispute between the US sugar companies and their HFCS counterparts for the past four years, the claims that HFCS was just sugar from corn and that the human body couldn’t differentiate between the two being the central issue. A court case started in a federal court in California at the start of November to settle the issue once and for all. By November 20 both parties were announcing that they had settled out of court but would give no details of the settlement. However, the hfcs web domain is still available and still states that HFCS is simply a form of sugar made from corn.
CUBA UPBEAT AT START OF HARVEST
The government of Cuba, through its wholly owned company Azcuba, is upbeat about the crop which is just starting. It has said that 50 factories will operate with the start of crushing varying from late November in the west to January elsewhere. Last year was a good harvest, 20% higher than the previous so we will have to wait and see whether that can be sustained.
GUYSUCO ON BUDGET
There is some good news from Guyana for a change : Guysuco reports that it is on budget to achieve its 2015 target of 227 000 tons of sugar. You have to go back to 2011 to find that level of production although it is not at all good to say 2004 when 320 000 tons was produced. The cloud on the horizon is the threat of another strike by the unions ; will they never learn?
COLOMBIA FINES SUGAR PRODUCERS
In October The Colombian government’s Ministry of Industry and Commerce fined the major sugar producers $100 million in total for colluding to keep cheap sugar imports out of the country. It certainly makes a change to see a government taking a stance against protectionism.
SANTOS LOADING HAMPERED BY RAIN
Early rains in Sao Paulo state not only hampered the crop but reduced the pace of loading at Santos port at the start of November when about 130 mm fell in only six days. The long term monthly average for November is only just over 160 mm.