Sugar Industry News : December 2018
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WORLD PRICE
The world price ended November down a bit at just below 13 US¢/lb :
There seems to be a lot of uncertainty about with the likelihood of a small deficit in the current year but stocks are high. There is talk of an El Niño event [said to be 80% chance] but it is expected to only last a few months.
EUROPEAN OUTLOOK DEPRESSED
The ISO London conference took place last month, producing a flurry of depressed forecasts for European beet sugar production. The general tone was that farmers just did not want to sow what is becoming a crop with mundane profitability. ISO forecasts 17.9 million tons of sugar for the current campaign, down 9% on the last one. Others are saying that 2019/20 will see even less production.
BREXIT CONCERNS
European sugarbeet growers and manufacturers have suddenly woken up to the implications of the UK leaving the EU and have asked the EU to 'take steps' to stop the UK changing its duty structure on raw sugar. If the UK – free from the EU – permitted say Brazilian raw sugar in then the EU could lose 500 000 tons of market.
BRITISH SUGAR EXPECTING FURTHER DECLINE
British Sugar is predicting production of just over 1 million tons in the current [2018/19] campaign, about 30% down on the 2017/18 figure. It expects even less beet area to be sown in 2019 [for the following crop] as the negotiated beet price is 9% lower than this campaign's.
TWO NEW FACTORIES IN UGANDA CLOSE TO COMMISSIONING
Two new sugar factories are reported ready for start-up in 2019. The first is Buikwe which is close to the lake west of the Victoria Nile and hence west of the Madhvani's Kakira factory, only 50km from Kampala. The second is Atiak which is in the far north of the country close to the White Nile as it flows into South Sudan so 200 km beyond Kinyara : remote indeed.
EXTENT OF MUMIAS DEBT SHOWN
It is difficult to understand how Mumias – once a shining example of how to privatise a state-owned sugar factory – could collapse financially but it has. Apparently it has not crushed since April because it owes its farmers US$80 million and there are other factories willing and able to take the cane. Perhaps worse, it owes its banks nearly $200 million.
KISCOL DEVELOPING WELL
The Kwale International [Kisco] estate, down on Kenya's south coast close to Tanzania, is controlled by Omnicane from Mauritius. It is reporting that it now has about 4 800 ha of nucleus estate and roughly the same area under cane with outgrowers. Over 85% of the nucleus estate is [Netafim] drip irrigated and the company reported that the irrigated land is yielding 84 t/ha compared to 57 t/ha without.
TONGAAT PLANS TO DEVELOP MORE LOWVELD CANE LAND
It is reported that Tongaat Hulett, which owns both Triangle and Hippo Valley in the Zimbabwean Lowveld plans to develop another 4 000 ha of virgin bush in order to increase its cane supplies. The two mills currently produce about only ~67% of nameplate capacity. TH want the land ready by the end of Q1 2020.
MAURITIAN FORECAST CUT
Mauritius cut its forecast for the year twice in November. The original forecast of 350 000 tons was cut to 324 000 tons early in the month and then down to 320 000 tons towards the end of the month.
PAKISTAN SEEKS MORE TAX FROM SUGAR INDUSTRY
The Pakistani government thinks that the country's sugar industry is evading tax and the focus seems to be on molasses. It is easy to see how high purity molasses could be sold to an associated company at normal price …
NEW PROJECT FOR PNG?
It is reported that the government of Papua New Guinea has signed an MOU for a new sugar complex in Abua district which is about 150km south east of Port Moresby. The other signatories are said to be project developers from Thailand and China. One report identified the Thai company as Mitr Kasetr which owns the Thamaka factory in Kanchanaburi [not to be confused with Mitr Phol!]. Little hard data is available although the government is claiming that the project will create 64 000 jobs and Mitr Kasetr talks of a US$ billion investment.
NORDZUCKER TO BUY MACKAY?
In August we reported that Mackay was expected to announce plans for its takeover by a foreign investor and suggested that Cosan was the front-runner. It has now emerged that Nordzucker, another potential bridegroom in August, is in talks with Mackay to take up to a 70% stake in what is the last home-owned sugar company in Australia.