Sugar Industry News : February 2018
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We closed last month by saying that only time will tell which pundits are correct. It looks like the bears win :
On the other hand, is the real falling back into its pattern of lagging two months or so behind the price?
IRISH BEET STILL POSSIBLE
One of the two groups wanting to resurrect the Irish beet industry, Beet Ireland, was in the news recently because it is reported to be buying an 80 ha factory site. It is now well over 10 years since Mallow, the last of Irish Sugar's factories was closed and the equipment sold off.
CAIRO PAYS OVER $40 PER TON OF CANE
Egypt has just increased its buying price for cane to US$40.75 per ton although it is not clear whether that is in the field or at the factory gate. Either way that is expensive cane when the world price of sugar is only just over $300 per ton. Even if the sucrose content allows 10 tcts, that is a loss of $100 per ton of sugar before the cost of processing.
KOMENDA NO FURTHER FORWARD
Ghana still doesn't seem to understand how the cane sugar industry works. Last September we told you that the government was going to appoint consultants. It turns out that these were academics from a local university who have produced a report on the lack of cane. One has been quoted as saying that 'You can’t plant and harvest sugar cane in a month. You need at least a year to plant and harvest.', jumping the requirement to develop enough seed to do that.
INDIA INCREASES CURRENT YEAR ESTIMATE BY 1 MILLION TONS
Both the Indian Sugar Mills Association and the All India Sugar Traders Association are now forecasting the 2017/18 crop at about 26 million tons, a million tons higher than previously forecast. Predictably, there are already cries to re-introduce sugar exports although the government is unlikely to allow that to happen when stocks are still low.
VIETNAM WAKES UP TO ASEAN
The Vietnamese industry is suddenly reacting to the effects of ASEAN's free trade agreement which came into force last month. It is admitting that it is not efficient and cannot compete against the Thailand industry. It found a lot of its customers just not buying towards the end of last year because they expected lower prices once the agreement was in force. It seems that their biggest concern is cane yield with an emphasis on needing help with better varieties.
PHILIPPINES REDUCING FORECAST
The Philippine Sugar Regulatory Administration announced at the end of January that it expected the current crop was now estimated to be less than the August estimate of 2.38 million tons. It didn't say what the revised estimate was but it cut the export allocations from 10% of production to just 6%.
CHINA'S 2017 IMPORTS DOWN 25%
Following the country's efforts to protect local sugar farmers, China's sugar imports in 2017, at 2.29 million tons, were down 25.2% year on year. Owners of port refiners are suffering badly as a result.
NOW THE CEO LEAVES MACKAY SUGAR
Following our December report that the Chairman of Mackay Sugar had been replaced by Mark Day, the CEO of two years – Jason Lowry – has left 'to explore new opportunities' with Mark Day taking over on an interim basis. Jason, an American, only replaced Quinton Hilderbrand about two and a half years ago, not that long after he was recruited into Mackay Sugar from American Crystal
US JANUARY FREEZE
January saw the southern, sugarcane states face freezing weather for about two weeks but – despite fears expressed at the time – the cane does not seem to have been damaged beyond recovery like it was in 1988/89.
The Mexican industry is complaining about the money it has lost as a result of the revised NAFTA sugar agreement from mid-2017. Under the agreement, the amount of refined sugar permitted to cross the border dropped from 53% to 30%, a difference of 264 500 tons. The Mexican calculation, however, is based on the maximum white premium and on a loss of 70% of the market [100% less the 30% still permitted], i.e. 805 000 tons.
BARBADOS PUTS ON A BRAVE FACE
Last month the Barbados Agricultural Management Company put a positive spin on the collapse of its traditional and lucrative UK market following the EU regime change. It pointed out this year it will be exporting to the region, albeit without saying to which countries.
It also reported that last year's total crop was only ~133 000 tons of cane from which just over 10 000 tons of sugar was made. This year's crop is predicted to be ~158 000 tons with production of 12 000 tons.