Sugar Industry News : January 2021
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The sugar price again continued its climb through December, ending the calendar year at about 15.2 ¢/lb :
It is difficult to see why it carried on climbing, particularly when India confirmed it would be subsidising another 6 million tons of exports in the 2020/21 year.
UK INTRODUCES ATQ OF 260 000 TONS PER ANNUM
The United Kingdom has now left the European Union after an 11 month transition period. Last month the UK government announced a zero rate Autonomous Tariff Rate Quota [ATQ] for sugar of 260 000 t/a. It will review the quantum annually. This means that non-ACP, non-LDC countries will be able to export 260 000 tons to the UK tariff-free.
In essence this is good news for ASR's Thames refinery and shouldn't affect the domestic industry. It just means a smaller market for the EU. The full announcement is available on line.
BLOOD ON THE TEREOS BOARDROOM FLOOR
Last month's attempted boardroom coup in Tereos, the French cooperative, went spectacularly wrong. Tereos wanted three of the board to step down and refused to hold a board meeting required to appoint a new Chairman until they did. A Paris court declared that they didn't have to and that the board meeting should proceed. The subsequent meeting then appointed one of the three as Chairman and fired the previous CEO and CFO.
TATE AND LYLE BUYS STEVIA PRODUCER
Tate and Lyle [not ASR that owns the Tate and Lyle trade name for sugar] has fully taken over its stevia partner Sweet Green Fields, a company that it originally invested in 15% ownership back in 2018.
RUSSIA PLANS TO INCREASE BEET CROP FROM 33 TO 40 MILLION TONS
Last month Russia announced that it would sow another 12,500 ha of beet this coming spring, the objective being to reach 40 million tons of beet in the 2021 campaign.
KENYA TO GIVE TWO FACTORIES TO THE COUNTIES
The Kenyan government has said that it will donate its ownerships in Mumias and Nzoia to Kakamega and Bungoma counties respectively, the counties where the factories operate. What is not clear is whether the counties where the other government factories operate refused to take them [and who would blame them?] or were not offered the opportunity.
IRAN RUNNING OUT OF CASH
In 2019/20 Iran imported over 1.1 million tons of sugar from India, contributing to that country hitting its export target. However, because of sanctions, Iran no longer has the cash [it is reported that it still hasn't paid for rice imported over 6 months ago] and it should produce more sugar for itself so there won't be a repeat in 2020/21.
INDIA OFFERS EXPORT SUBSIDIES FOR 2020/21
Flying in the face of the imminent WTO case(s), the federal government in India approved an INR 35 billion [US$ 475 million] sugar export subsidy package in mid-December. The target is the same as last year : 6 million tons. At least the subsidy is only 56% of that allocated in the 2019/20 year.
It was reported elsewhere that millers in UP entered into export contracts before the announcement on the basis that the subsidy would be the same as last year so it will be interesting to see whether they stick with them or buy out.
ISMA AGAIN PRESSES FOR A REVENUE SHARING PRICE FORMULA
The Indian Sugar Mills Association [ISMA] is again pressing for the government set 'Fair and Remunerative Price' [FRP] system to be replaced by a revenue sharing cane price formula. It is even prepared to accept that growers should get 75% of the revenue based on sugar sales only [or 70% based on sugar and by-products sales]. That is a very high percentage but growers don't want to switch and there are a lot more growers than millers that vote in state and federal elections.
LATE START TO CROP IN BELIZE
BSI has to cope with four separate growers' organisations and a disagreement with the largest of them in a dispute which seems to be between the four delayed the start of crop in Belize last month. It eventually started as the month ended so keep your fingers crossed.
FIRST ESTIMATES OF 2021 BRAZILIAN CROP APPEARING
Some commentators are starting to predict what will happen in Brazil this year. What is known is that the rains in 2020 were relatively poor : only 67% of the average in the Center-South between April and October. However, the Brazilian real favours crystal over ethanol and so does the ethanol price so there should be no change in the production ratio of the two : watch this space!