Sugar Industry News : November 2019
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October was another month of wait and see :
We now have the data on the October close and perhaps the traders are finally getting it right : there were virtually no physicals involved with only Wilmar taking a modest 175 000 tons.
SÜDZUCKER POSSIBLY OPTIMISTIC?
Südzucker published its first half-year results in early October and it was still forecasting group profits for the year to February 2020 of only €0 to 100 million, weighed down by a loss of €200 to 300 million in the sugar division. What is strange is that just two weeks later Reuters was quoting a ' Südzucker spokeman' as saying that the company was expecting group profits for the full year to be €50 to 130 million with sugar losses of €200 to 260 million.
SÜDZUCKER SUSPENDS FALESTI PRODUCTION
Last month Südzucker announced that it would suspend production at Falesti in Moldova until April 2021, leaving only Drochia operating. It blamed poor sales as a result of inward smuggling of sugar and poor exports to the EU due to market conditions.
BANKRUPT SECERANA BIJELJINA SALE COLLAPSES
Last month the bankrupt Bosnian factory Secerana Bijeljina was reported to have been sold to a Chinese group but by the end of the month that offer had been withdrawn [if it was ever made properly] and now it seems that a local conglomerate will buy the company but for only half of the asking price.
ED&F MAN SELLS SUGAT
ED&F Man has sold Sugat, its business in Israel, to a local investment company – reportedly for $65 million. Man built a refinery for Sugat back in 2007. Before that it had imported its sugar which it sold alongside a large range of dry food goods. However the refinery has recently been closed so presumably the company is back to importing unless the new owners want to restart the refinery.
ANOTHER FACTORY FOR THE PORT SAID AREA?
Back in 2015 the Supreme Group, a company best known as a supplier of logistics to the US military, announced that it would invest $500 million in 'African SMEs involved in the food industry'. It announced last month that some of that investment would be to construct a $200 million 'sugar plant' near Port Said. The company has stated that it will be the largest in the Middle East, at the same time saying that its capacity will be 30 000 tons? Do they mean 30 000 tsd [in which case where will the beet come from …] or 30 000 tons/a of sugar?
KENYA REPORTS DECLINING PRODUCTION
Kenya’s Sugar Directorate has reported an 8% decline in production between January and September [down ~30 000 tons] and an increase in imports of ~134 000 tons. It blames the continuing closure of Chemelil, Mumias and [private sector] Kwale.
TONGAAT TO LEAVE CANE FARMING IN RSA
Tongaat Hulett has announced that it will sell off all of its cane farming operations in South Africa as it tries to cope with the current accounting scandal. It owns nearly 120 000 hectares of land in RSA and will initially lease them to others to farm while it works on the sell-off in the longer term.
Meanwhile the company has stated that it will only announce the date for releasing the much delayed annual results on the 18th of this month.
UP GOVERNMENT MODERATES ITS STANCE
Last month we reported that the government of Uttar Pradesh had set the end of October as the date for settlement of all outstanding cane payments 'or else…'. It subsequently moderated its language, asking the Federal government to allocate a larger sales quota to the state so that the millers could comply and to also force the monopoly electricity buyer to pay outstanding payments to the millers(!).
UP MILLERS WANT A FAIR PRICE FOR MOLASSES
Meanwhile, using a similar message to that in the article above [we need more income to pay the cane arrears], the millers in Uttar Pradesh are asking that they are free to sell their molasses on the open market. The state currently has a scheme whereby ~15% of the molasses produced must go to state distilleries [rum for the voters!] at a price which is a small fraction of the market price.
CHINA CRACKS DOWN ON SMUGGLING
The Chinese government is reported to have severely cracked down on the sugar smuggling which has been going on over the last few years. One estimate is that smuggling was accounting for 1.5 to nearly 3 million tons of sugar, mainly flowing from India and Thailand through Burma, Vietnam and Laos before crossing the border. Some say that the crackdown has essentially stopped the flows completely.
FSC TRIES 'OWN BRAND' APPROACH
The Fiji Sugar Corporation has started to market its sugar with the retail brand 'Sugars of Fiji'. It hopes to sell into the New Zealand and the UK almost immediately and looks to the US and Australia as markets too.
2G BIOETHANOL FOR LOUISIANA?
Omega Energy USA is a small Florida based oil and gas company trying to reinvent itself as a renewable energy company. Back in 2015 it announced that it wanted to build a second generation bagasse ethanol production unit in Louisiana. It may be that that is now coming to fruition in a joint venture with LASUCA which owns the St. Martinville sugar factory near Lafayette. The planned annual capacity of the plant is reported to be between 38 and 56 000 m³.
RAÍZEN TO HIBERNATE BOM RETIRO AGAIN
Raízen, the Cosan / Royal Dutch Shell JV, announced that it would again place its small Bom Retiro factory [25km south east of Piracicaba] into hibernation at the end of the current crop. It did the same thing a few years ago so perhaps it is time for 'retiro'. What is interesting is that it is doing so at a time when its total crush is increasing.