Sugar Industry News : July 2019


 

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WORLD PRICE

The world price had clawed its way up to 12.75 ¢/lb by the end of June :

World Price

Although there is a lot of subjective optimism around there is still no clear consensus as to where it is heading in the medium term.

TEREOS PUBLISHES ANNUAL RESULTS

French cooperative Tereos published its 2018/19 results last month, showing an annual net loss of € 242 million [$ 275 million] and a net debt of € 2.5 billion. Last year's loss was € 23 million. The company declined to comment on whether its latest round of debt restructuring [which we reported on in May this year] had been successful but reaffirmed its intention not to close any operating units.

CRISTAL UNION ANNOUNCES RESULTS

Cristal Union, the other French cooperative, also announced its 2018/19 results last month. Its net loss was € 99 million [$ 110 million] compared to a profit of € 49 million in the previous year. Its chairman is certain that there will be more factory closures announced around Europe : he expects a total of 'about 15' closures.

UGANDAN FARMERS REFUSED EXPORT PERMISSION

Strangely, cane farmers in eastern Uganda have applied to the government to export cane to Kenya. Permission has been refused on the grounds that the local factories have the capacity to cope with the cane but why ask in the first place? It is about 100 km from Jinja to the Busia border crossing : surely the economics just don't add up?

TONGAAT HULETT CLOSE TO COLLAPSE

Tongaat Hulett, once Southern Africa's premier sugar group, seems close to collapse and was forced to suspend its shares last month. The nub of the problem is incorrect, possibly fraudulent accounting. It has said that it will have to restate its 2018 results and has delayed its 2019 results until this coming October while PWC undertakes a review of its accounting practices. Most, if not all of the top management have gone and 5000 redundancy notices have been issued. The share price has lost 75% of its value since the start of 2019.

MONSOON RUNS LATE

This year's monsoon has been about two weeks late starting, prompting concerns about cane for the 2019/20 crop. The biggest concern is for Maharashtra where the question is whether two more weeks without rain caused any permanent harm.

INDIAN FACTORIES NOW OWE FARMERS $ 2.8 BILLION

Despite all of the talk about paying [or being forced to pay] outstanding cane arrears, the latest government figures show that Indian factories now owe farmers close to INR 190 billion [US$ ~2.8 billion]. As we reported previously, the situation seems to be worst in Tamil Nadu : Thiru Arooran and its subsidiary Shree Ambika have already called in the Administrator ['Interim Resolution Professional' in India] and are said to owe the cane farmers INR 1.3 billion [$ ~19 million] between them. How do they get paid if the companies do go bankrupt?

ANGKOR SUGAR STILL A HEADACHE FOR MITR PHOL

Mitr Phol's ill-fated Angkor Sugar operation in Cambodia is still cauing problems for the company. Some Cambodian farmers are trying to establish a class action against the company in Bangkok. They claim that it is the company's fault that they lost their land when the Cambodian government allocated it to Mitr Phol over 10 years ago. There is no mention of any blame lying with the government, nor of the position with respect to land ownership in Cambodia.

SUCRO SOURCING ANNOUNCES START-UP OF HAMILTON REFINERY

Sucro Sourcing, a bijou trader operating in the America's, has announced the start-up of a refinery in Hamilton, Ontario so just 60km from Redpath. Some have described it as a 'micro-refinery' but there is no obvious data about its capacity. One of the directors of Sucro Sourcing is Don Hill, a name we have heard before in relation to such ventures.

USTR REALLOCATES SUGAR QUOTAS

Last month the US Trade Representative reallocated 100 000 tons of sugar quotas away from countries that will not be using them in the 2018/19 year but there are some strange countries on the list : Haiti, St. Kitts and Nevis and Trinidad-Tobago among others. Surely none of them has any sugar production to export?

AZCUBA CONFIRMS 1.3 MILLION TON CROP

Following last month's news item, the Cuban government's company Azcuba has confirmed that it only achieved production of 1.3 million tons – 13% below budget – during the 2018/19 crop. It did say that it 'met its export commitments' but didn't clarify whether that was just the 400 000 tons to China or whether that included over sales. At 400 000 tons it should be able to meet local demand but otherwise more imports could well be on the horizon.

RISING US CORN ETHANOL PRICES TO BOOST BRAZILIAN ETHANOL EVEN MORE?

There is talk of US corn ethanol costs rising which would mean less exports to Brazil's north-east and hence more domestic ethanol consumption which means less domestic crystal sugar. US corn prices are 25% up since May [rain delayed corn sowing] and ethanol prices are 20% up. One Brazilian trader is expecting ethanol to reach the equivalent of sugar at 15 ç/lb.

BUNGE TALKS UP BRAZILIAN PERFORMANCE

Last month Bunge announced that its 8 factories in Brazil had crushed record tonnage in May and June. However, it is well known that Bunge has fallen out of love with sugar and wants a complete divorce so this is probably a prelude to another attempt to sell off the Brazilian unit – which should complete its exit from the industry?

CZARNIKOW TAKES THE PLUNGE IN BRAZIL

London based trader Czarnikow is reported to have taken a 49% stake in a new ethanol trading company in Brazil. As yet there is no information as to the equity participation of the new entity.