Sugar Industry News : November 2020
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The sugar price continued to climb gently through October [with the usual bumps, ending the month at about 14.2 ¢/lb :
The climb was surprising given the vast quantities of physical sugar delivered at the close of the October contract and the quantity of crystal expected from Brazil [the world price climbed to BR 81¢/lb during the month as sugar climbed and the real fell]. More about both of those factors can be found below.
RECORD CLOSE FOR OCTOBER CONTRACT
It emerged last month that when the October contract expired there was a record 2.62 million tons of physical sugar delivered, of which Cofco – the Chinese sugar company – delivered 48%. Virtually all of the 2.62 million tons was available in Brazil.
DIGITAL SUGAR TRADING PLATFORM FROM AL KHALEEJ AND DUBAI GOVERNMENT
Al Khaleej and Dubai's Dubai Multi Commodities Centre have launched a digital sugar trading platform using 'blockchain' technology. Every trade is said to be backed by Al Khaleej's physical stock for which it charges a 2.5%/a storage charge. As the platform allows any amount of trade from 1 kg (!) to 1 million tons (!!) it seems to be more of a gambling platform than a real trading one.
NORDZUCKER PREDICTS A RETURN TO PROFIT
Nordzucker has marked its first half by stating that it expects to make a profit in the year due to end next March despite the pandemic. It lost €36 million in 2018/19 and another €15 million in in 2019/20. The CEO told shareholders that a good part of the turnaround was due to cost-cutting.
SÜDZUCKER SUGAR STILL MAKING A LOSS
Südzucker is in a much better position than Nordzucker, being a diversified group but its sugar division is still loss making. That division lost €236 million in the 2019/20 year and the group is expecting it to make a loss somewhere between €50 and 100 million in the year due to end next February.
INDIA NOT TO EXTEND EXPORT SUBSIDIES?
The federal government in India is stating that it will not extend its export subsidy programme beyond the current year, a programme which is being challenged at the WTO. It claims that this is because the world price is stable but perhaps it has caught wind of the outcome of the WTO cases?
ISMA ISSUES ITS FIRST ESTIMATE FOR 2020/21
Indian Sugar Mills Association has issued its first estimate for the 2020/21 year, putting crystal sugar production at 31 million tons after allowing for diversion of some B molasses to ethanol production [in the past it has made estimates before that allowance]. Virtually all of the increase over last year's output comes from Maharashtra and Karnataka.
AMERICAN CRYSTAL RECORD HARVEST
American Crystal has reported a record harvest but not in terms of tonnage : the entire harvest was finished in 17 days thanks to dry weather. Unfortunately, that dryness also meant that the beets didn't put on the weight that would have been preferred.
SAENZ SELLS MANTE TO PANTALEÓN
In February, we reported that ED&F Man had posted losses of $198 million as a result of writing off the value of 'certain sugar assets' which we assumed to be its shareholding in Mexico's Azucar Grupo Saenz.
Saenz, for now, seems to be concentrating all of its production at Tamazula in Mexico's western province of Jalisco. It announced the immediate closure of its Xico factory in August and has now sold its Mante factory to Guatemala's Pantaleón group. Xico and Mante, only 30 km apart, are both in the country's gulf coast province of Tamaulipas.
IANSA CLOSING LOS ÁNGELES
In another move by ED&F Man, IANSA – its beet sugar producer in Chile – has announced the closure of its Los Ángeles factory. That means that all production will be at Chillán because it closed Linares back in 2018. Chillán is about 100 km north of Los Ángeles and has always been the most important of the IANSA factories.
BRAZIL HEADING FOR 38 MILLION TONS THIS CROP
The swing in Brazil from ethanol to crystal sugar has been so strong that current estimates are for 38 million tons of crystal to have been produced by the time that the crop winds down this month. The net effect is that stocks at the end of September have been estimated as nearly 14 million tons although one commentator has claimed that virtually all of that stock was already sold.