Sugar Industry News : September 2018
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The world price stabilised last month, ending at just above 10.5 ¢/lb :
What does not show is that it fell to just below 10 ¢/lb momentarily during the month : keep your fingers crossed.
WILMAR BUYS BUNGE SUGAR BOOKS
Towards the end of August it was announced that Wilmar was buying the sugar trading operations of Bunge, bringing to an end Bunge's little more than 10 year foray into sugar trading. Unfortunately for Bunge, Wilmar showed no interest in buying its physical sugar assets, the 8 factories in Brazil.
TEREOS PROFIT DROPS SHARPLY
Tereos, the French sugar cooperative, is the latest European company to announce falling profits. Its Q1 group results show a fall of 29% year on year but profits in its European sugar division for the same period dropped from about €52 million to just €20 million. At least it was a profit.
TANZANIA APPLIES 25% TARIFF TO UGANDAN SUGAR
All common markets have their problems and the East African Community [EAC, not to be confused with COMESA although there is an overlap between the two] is no exception. The Tanzanian government applied a 25% import duty on Ugandan sugar at the start of August as part of a wider imposition covering various commodities.
SOUTH AFRICA INCREASES IMPORT REFERENCE PRICE BY 20%
Following our article in the July news, the South African government increased the sugar import reference price – and hence tariffs – by 20% last month. Industrial users are not happy of course but neither are the local producers as they wanted a much higher increase. The public [aka 'voters'] is not complaining because the effect of the increase has not yet reached retail prices.
INDIA EXTENDS EXPORT PERIOD
Only some 25% of the federally imposed 2 million tons of sugar export has taken place so the Indian government has extended the deadline from the end of September to the end of the year. The government claims that the lack of exports is because the monsoon rains impeded the movement of sugar so clearly it has nothing to do with the world price and the cost of production …
MAHARASHTRA CANE PAYMENT AREARS NEARLY INR 6 BILLION
A sign of the times : despite a lot of pressure from the Maharashtra state government, the state's sugar factories still owed farmers INR 5.9 billion [US$ 86 million] at the start of August.
GOKONGWEI BUYS CADP
A seismic shift in the Philippines industry : towards the end of August the Roxas group announced that it was selling Don Pedro, by far the better of its two factories in south west Luzon, to the Gokongwei group. The sugar division of Gokongwei, part of its Universal Robina corporation, owns and operates Passi, Tolong and Sonedco among others.
MEXICO TO EXPORT OVER 750 000 TONS TO USA
The Mexican government announced in mid-August that a record quantity of sugar – over 750 000 tons – would be exported to the USA in the 2018/19 year. Given the current political climate in North America one has to question the wisdom of actually announcing such a record.
BRAZIL NOT REPLANTING ENOUGH
Replanting in Brazil is expected to be only 11% this year, only two thirds of the ideal level. In part this is due to the drought conditions in some parts of the country – the soil is too dry to replant naturally – but most of the problem is economics. The problem with drought is that it is a short-term issue but inadequate replanting is a long-term one.
BRAZIL PRODUCTION TO DROP BELOW INDIA?
Some analysts are predicting that crystal sugar production in Brazil could fall below India's production in 2018/19. In Brazil the plant area is falling and yields will be falling as well as farmers avoid investing in their crops. This year's Brazilian production, influenced by diversion to alcohol of course, is expected to be 32 to 34 million tons and India is predicting about 32 million for the same period climbing to 35 million next year. Remember, though, that we are talking about crystal sugar production : in terms of cane production Brazil's lead is untouchable.
COSAN REPORT SHOWS IMPACT OF WORLD PRICE AND STRIKES
Cosan reported its Q2 results last month and it is not pretty reading : although revenue was up 16%, EBITDA was down about 8%. The blame is placed squarely on the sugar world price [because the company can only swing towards ethanol to some extent] and on the BRL 200 million [US$ 50 million] loss resulting from the truckers' strike.
ISRAELI SWEETNESS ENHANCER TAKEN UP BY SÜDZUCKER
DouxMatok is a company which offers a sweetness enhancer technology. The patent talks about nano-particles of silica being a carrier for sucrose so that the sucrose is more readily available to the sensors on the tongue. It is reported that Südzucker has partnered with DouxMatok to bring the technology to the European market.