Sugar Industry News : April 2019


 

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WORLD PRICE

The world price continued to be flat last month :

World Price

There is talk of better things to come - see the news item immediately below - but no mention of when they will come ...

ISO CUTS ITS CURRENT YEAR FORECAST

The International Sugar Organization cut its 2018/19 forecast last month, saying that it now expected a global surplus of just 641 000 tons. That is just one third of a percent of the expected production. Its previous forecast was about 2.2 million tons or 1.2%.

THE END OF LIVE TRADERS?

According to a report published in March, all of the major sugar traders are developing algorithmic trading systems like those used by hedge funds, either employing a specialist company or hiring specialists to develop an in-house system. Among the names mentioned were Raizen, Alvean, LDC and Man.

FRENCH GOVERNMENT TRIES TO INTERFERE WITH SUEDZUCKER'S PLANS

As part of its re-structuring Suedzucker announced the closure of two of Saint Louis Sucre's factories in northern France : Eppeville, not far from Amiens and Cagny, close to Caen. Last month the French Minister of Agriculture was quoted as using very strong language with respect to the closures including declaring Suedzucker as acting like a 'predator' and stating that the plans were 'unilateral and unacceptable'.

TEREOS RE-ARRANGES THE DECK CHAIRS

There have been major changes in the top management team of Tereos as it struggles to cope with the impact of the EU regime change and the relatively low world price. At head office the CFO and the head of trading have both been replaced and in Brazil the local CFO and the Agricultural director have both been fired. The company is also slowing down payments to its French beet farmers [owners as the company is a cooperative].

CANAL SUGAR GOING AHEAD?

Egypt's Canal Sugar, part-owned by Al Khaleej, has announced that it has secured a $169 million loan facility from a consortium of regional banks which will allow it proceed with the project. Note, however, that it needs to secure a $700 million long-term in the next six months for the project to be fully funded. We had understood that the project was going to be in the eastern delta region but it will now be on the west bank of the river near Minya, about 250 km south of Cairo.

The project is reported to involve a 36 000 tsd beet factory and 76 000 ha of desert to be converted into productive agricultural land aimed at producing 2 million tons of beet each year.

PAKISTAN GIVEN CHINESE QUOTA – BUT NOT INDIA

In January we reported that India had not only asked China for a sugar quota but had asked for it to be agreed quickly so that it could start exporting to that country. Last month China gave Pakistan a 300 000 ton quota but had still not allocated anything to India.

INDIA OFFERS MILLERS US$ 1.43 BILLION IN SOFT LOANS TO CLEAR CANE ARREARS

The federal government in India has offered the sugar millers a soft loan facility of $ 1.43 billion so that they can pay the cane farmers the amounts due on past deliveries. The loans will be so soft that it will reportedly cost the government 10% : that is another $ 143 million of subsidies to the industry just as Australia and Brazil are proceeding with their WTO complaints. Guess when the Indian elections are ...

INDIA STARTS TO SEE BIOETHANOL FROM JUICE AND B MOLASSES

In the March news we were hoping that the Indian factories would start to divert sugar into ethanol production, something which the government now permits. Subsequently, the Indian Sugar Mills Association reported that about 120 000 m³ of bioethanol from juice and B molasses had been delivered, equivalent to about 100 000 tons of crystal not being produced. That might be 300 000 tons over the crop so only 1% diversion compared to Brazil's ~50%.

USDA EXPECTING LOWER DOMESTIC YEAR-END STOCK

In its March report the USDA forecast a drop in this year's domestic year-end stock of 300 000 tons relative to the 2017/18 position last September. The forecast figure is about 1.5 million tons which is still 13.5% of domestic consumption.

BRAZIL PUSHES FOR HIGHER US QUOTA

Brazil has a low-tariff US quota of 150 to 170 000 t/a of sugar. By comparison, Brazil grants the US a tariff-free quota of 600 000 m³/a of bioethanol. The Brazilians, pushed by the sugar lobby, wanted to bring their sugar quota more in line with the reciprocal bioethanol quota in trade talks which took place in March but there has been no announcement so far.