Sugar Industry News : July 2021
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Raw sugar prices ended the month almost a cent per pound higher at just under 18 ¢/lb. Overall it was a choppy month for trading which saw prices dip as low as 16 1/2 cents mid-month before a second half rally which included the July contract coming off the board. The July expiry saw only a small delivery of 2,587 lots, or 131,427 tonnes. It was the smallest delivery for the July contract since 2014. Asian commodities trader Wilmar International was seen as the sole receiver of the sugar, while food trader Viterra was the only deliverer. The overall macro picture remained positive and concerns over frosts in key producer Brazil added to buying support during the second half of the month. Refining margins held steady with the white premium almost unchanged at $74/ton. The Brazilian Real continued its strong quarter thanks to recent central bank interest rate hikes:
COPERSUCAR SUGAR SALES RISE 28.5% to 5.4M TONNES IN 2020/21 HARVEST
Brazil's Copersucar, one of the world's largest sugar merchants, said on Tuesday its sugar sales totaled 5.4 million tonnes this harvest, up from 3.7 million tonnes in the previous year. Its sugar exports were 3.4 million tonnes compared to 1.9 million tonnes last year. With the fuel market affected by the pandemic in 2020/21, Copersucar's sales of ethanol dropped to 11.1 billion liters during the 2020/21 harvest, down from 14.2 billion liters. Of the total ethanol sold, 4.6 billion liters were sold by Copersucar directly, while sales by the U.S. subsidiary Eco-Energy totaled 6.5 billion liters. Copersucar said net sales were 38.7 billion reais (7.74 billon USD) from the 2020/21 harvest, up from 30.1 billion reais (6.02 billion USD) in the previous year. Consolidated net profit was 375 million reais (75M USD) versus 119 million reais (23.8M USD) in 2019/20.
TEREOS CONTINUES SENIOR MANAGEMENT RESHUFFLE
French sugar and ethanol group Tereos announced during the month that its head of trading and marketing, Philippe Huet, was leaving. Huet was also responsible for sales, research and development. This adds to a series of management changes in recent months for Tereos during what has been a challenging period for the company. Earlier in the month, Tereos reported a net loss of 133 million euros ($158.79 million) in the year to March 31, against a profit of 24 million a year earlier. The new leadership has said it wants to shift its commercial strategy from a volume-based to a margin-oriented approach. Tereos remains in talks to sell a stake in a starch joint venture in China and exit its loss-making sugar activities in Romania.
BRAZIL'S SUGAR OUTPUT REVISED DOWN FURTHER AS DRY WEATHER PERSISTS
London based sugar merchant and supply chain services provider Czarnikow revised down their estimate for Brazil’s 2021/22 Centre-South (CS) sugar production to 34.1 million tonnes from an April projection of 35.6 million tonnes, as persistent dry weather hurt cane development. Increased sucrose levels from the dry weather and a lower product mix of ethanol vs sugar will help mitigate some of the lost production however the estimated 535mmt sugarcane harvest will be the Centre-South's lowest level since 2012. Cumulative rains from January to June in 2021 were 43% below the average and the lowest level in the last decade.
CRISTAL UNION SAYS LOWER BRAZIL OUTPUT SWEETENS OUTLOOK
Cristal Union will likely double its net profit this coming season on higher expected output from its beet sugar refineries and price support from lower Brazilian production according to Alain Commissaire, Director general of France’s second-largest sugar producer. Commissaire believes Cristal Union's 2021/22 profits will be helped by a rebound in the French sugar beet harvest but eventually depend on prices. Cristal Union plans to pay an average of 27 euros per tonne of sugar beet in 2021, up from 25.5 euros in 2020, and hopes to reach 30 euros “in the near future”. Commissaire anticipates Cristal Union's EBITDA to rise by 50% this season from 201 million EUR reported for 2020/21 and just 63 million EUR a year earlier.
BRAZIL ENERGY GROUP RAIZEN OFFICIALLY FILES FOR IPO
After keeping the markets in suspense for a number of months, Brazilian energy company Raizen has officially registered for an initial public offering with the Brazilian securities regulator. Raizen is a joint venture between Royal Dutch Shell Plc and local sugar and energy group Cosan SA. The company, the fourth largest in Brazil by revenue, is the largest sugar producer in the world and it also operates a major gas station chain in Brazil and Argentina. The IPO is aniticpate to raise up to 13 billion reais ($2.56 billion USD). The company said it plans to use the offering proceeds to build new plants to expand production, invest in storage infrastructure and boost productivity.
VIETNAM EXTENDS ANTI-DUMPING LEVY ON SUGAR IMPORTS FROM THAILAND
Vietnam will extend and increase anti-dumping measures on sugar imports from Thailand by imposing a levy of 47.64% for five years to replace a temporary tax of 33.8% introduced in February, the country's industry and trade ministry announced. The decision comes after the ministry finished an anti-dumping investigation that started last September on behalf of the domestic industry. The Ministry's probe showed that subsidised sugar shipments from Thailand surged 330.4% to 1.3 million tonnes in 2020 and that the imports were undermining the domestic sugar industry. The government of Thailand said it would initially respond by filing an objection and ask Vietnam to open another investigation to review the measures again next year. Vietnam had previously removed import duties on sugar imported from Southeast Asian countries in 2020, in accordance with the commitments of the ASEAN Trade in Goods Agreement.
ETHIOPIAN PM INAUGURATES CHINESE-BUILT SUGAR FACTORY
Ethiopian Prime Minister Abiy Ahmed inaugurated a Chinese built sugar factory on June 6th constructed in the Sub-Saharan country's northern Amhara regional state. Tane Beles No.1 Sugar plant project was completed by CAMCE, a corporation which belongs to China National Machinery Industry Corporation (SINOMACH). The factory has a daily crushing capacity of 13,000 tons of sugarcane and expects to produce up to 1,500 tons of refined sugar per day and 200,000 tons of refined sugar per year. The project is also equipped with a 45 MW generator set, which can generate 30 MW to the external power grid. The inaugaration of the Tane Beles factory is a brighter note for a country that has been faced with much uncertainty of late due to instability in its northern Tigray region. CAMCE is also the project contractor for the Welkait sugar factory, whose construction remains ongoing despite being damaged by an air raid in November of last year during the Tigray conflict.