Sugar Industry News : August 2018
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The world price carried on downwards, ending last month at just below 10.5 ¢/lb :
Where do we go next? One suspects that going below 10 ¢/lb would trigger a lot of bankruptcies.
SUEDZUCKER Q1 PROFITS COLLAPSE
Suedzucker's report for the quarter ending May 2018 was released last month : profits dropped to € 78 million, more or less half of last year's equivalent figure of € 153 million. The company is forecasting a loss for its sugar sector of € 100 to 200 million for the full year [compared to a profit of € 139 million in 2017/18] which will go a long way to wiping out the profits from its other sectors.
ALLEGED TAX FRAUD AT MUMIAS
The tax authorities in Kenya are claiming that Mumias owes KES 1 billion [US$ 10 million] in VAT and interest. They claim that the company sold sugar on the local market [where VAT was collected] but declared it as exported [where VAT was not due], pocketing the difference. Interestingly, this only emerged when Parliament was pressurising the tax authorities for poor performance on other aspects of the sugar industry.
INDIA TO REACH 35.5 MILLION TONS IN 2018/19
The Indian industry is totally out of control. In June we reported that ISMA had again increased its forecast for the current crop to between 31.5 and 32 million tons. The latest figure is now 32.25 million tons and ISMA is forecasting another rise to 35.5 million tons for the next crop.
INDIA INCREASES THE CANE PURCHASE PRICE AGAIN
The Indian federal government has now announced the fair and remunerative price [FRP] for 2018/19 sugarcane of INR 2,750 per ton [US$ 40/ton]. The FRP assumes a 10% recovery with a pro-rata bonus for higher recovery and a pro-rata reduction for lower production but only down to 9.5%, below which the farmer still gets the INR 2,612.5 price. The government states that the cost of production is INR 1,550/ton so the FPR provides a 77% contribution.
Remember that the federal FRP is not necessarily what the millers pay : each state sets its own FRP and, in general, they set a higher FRP than the federal one.
MACKAY SELLING MOSSMAN
Mackay Sugar seems to have reached an agreement for the local growers to buy its Mossman factory in Queensland's far north. This comes at a time when the industry is expecting an announcement about a foreign investor taking a substantial stake in Mackay with the odds seeming to favour Cosan as that party. Presumably the sale of Mossman is part of the negotiations the foreign investor.
CUBA CONSIDERS CHANGING CROP PERIOD
Following last month's news, it is reported that Cuba's President has confirmed that the crop not long ended was indeed only 'something more than a million tons of sugar'. He is said to have instructed Azcuba to undertake a climate review with a view to changing the traditional crop period in order to improve the crop. As the country only managed to produce the million tons from almost 600 000 ha of cane land, that is probably a good idea.
JAMAICA STRUGGLES TO FIND A BUYER FOR MONYMUSK
The minister responsible for, inter alia, the sugar industry has told the Jamaican parliament that he is working the Pan Caribbean [the Chinese owner of what was SCJ] to find a new investor to either buy or enter a JV for Monymusk, Pan Caribbean having announced that it would never operate the factory again back in Q4 2017. He also said that he is in the process of taking back control of over 16 000 ha of land currently under Pan Caribbean control.
BRAZILIAN PRESIDENT HOPES TO REDUCE CHINESE TARIFFS
BRICS is an acronym for a loose grouping of countries with developing economies : Brazil, Russia, India, China and South Africa. The 10th BRICS summit was held in South Africa towards the end of July. It was subsequently reported that President Temer had asked President Xi Jinping to reconsider the additional tariffs imposed on Brazilian sugar, supposedly for 'dumping'.
SUGARCANE GENOME FINALLY SEQUENCED
CIRAD, the French agricultural research centre in Montpellier, announced last month that it has fully sequenced the sugarcane genome. That is no mean feat because it is a highly complex genome with 10 to 12 copies of each chromosome [human bodies have two copies of each]. Completion of the sequence should see a surge in positive results from the industry's breeding programmes.