Sugar Industry News : October 2019


 

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WORLD PRICE

There was an artificial jump in the data as we went from October 19 to March 20 pricing :

World Price

Not that the jump is unwelcome of course. Does it herald better times to come? Some hoped for that when the mid-September Saudi drone attacks took place and oil prices jumped but by the end of the month they had returned to normal.

ISO PREDICTS A 4.76 MILLION TON DEFICIT FOR 2019/20

Last month, the International Sugar Organization forecast a 4.76 million ton market deficit for the year just started when it published its first full outlook for the year. That is despite an expected fall in consumption growth to only 1.34%. One has to remember that even a 1.34% increase is still another 2.3 million tons of demand.

CRISTAL UNION GETS FINANCIAL SUPPORT

A Parisian investment company called Unigrains has invested 'several million euros' in the French sugar cooperative Cristal Union as 'quasi-equity'. Quasi-equity, apparently, typically means that the financial return is calculated as a percentage of future revenue streams. It’s a loan with equity like returns.

AL KHALEEJ DE ESPANA?

Almost exactly two years ago we reported on the possibility of Al Khaleej Yorkshire, a proposed beet factory near Allerton Castle. That location died the death but it seems that the project has wheels and is now proposed for Spain's Extremadura region, just 60 km from the Portuguese border due east of Lisbon. This time it is said to have an annual slice of 5.4 million tons with the objective of producing 900 000 tons of 'brown sugar' each year. Where will the water come from for the crop?

NIGERIA CLAIMS TO BE ON TRACK FOR 750 000 TONS BY 2023

Nigeria's National Sugar Development Council is claiming that the country will be producing 600 to 750 thousand tons of [raw] sugar annually by 2022/23. It's longer term objective seems to be to reach 1.8 million tons annually, at which point it expects to have a generating capacity of 411 MW [a very precise figure?].

SONY SUGAR IN DEEP TROUBLE

South Nyanza Sugar was only commissioned in 1980, a 3000 tcd factory owned by the government but built by the Mehta group [India and Uganda]. It is one of the factories that the government wants to privatise. In its heyday – 1990's under BT management – it produced 116% of its 60 000 ton annual sugar target.

A recent report indicates that it is only achieving 200 tcd (!), in part because it there has been no significant maintenance for the last 5 years, in part because the core estate has such poor yields and in part because outgrowers can sell their cane to other [private] factories in the area. Who is going to buy such a company?

BAD NEWS FOR THE SOUTH AFRICAN INDUSTRY

The South African government has signalled that it wants to move away from a sugar industry supported by protectionism to one based on competitiveness. It may find that such a move will cause serious unemployment issues as the industry is estimated to provide some 350 000 jobs. Maybe it will be happy to let the rand slump even more?

INDIA PROCEEDS WITH NEW EXPORT SUBSIDIES

India is going ahead with a 5.5 US¢/lb subsidy with the objective of exporting 6 million tons of sugar. That will cost the federal government an addition $1 billion dollars and flies in the face of the WTO complaints procedures currently under way. It also had the effect of increasing domestic prices in India. The industry is already talking about exports to regional deficit countries.

UP GOVERNMENT SETS DATE FOR CLEARING OUTSTANDING CANE PAYMENTS

The state government in Uttar Pradesh has set the end of October as a deadline for millers to pay all outstanding cane payments. Any outstanding payments after that date will be settled by confiscation of sugar from the millers.

INDIA ANTICIPATES BREXIT BY OPENING SUGAR MARKET DISCUSSIONS

The EU28 [i.e. including the UK] allows India to export 10 000 tons of concessionary sugar to it annually. What India wants to know is how much will that quota be for the EU27 after Brexit and how much will the UK permit?

IMPACT OF MAHARASHTRA FLOODS BECOMING CLEARER

Following last month's report of flooding in Maharashtra [where rainfall has been 30% above average since the start of the monsoon period] it is now reported that 12% of the land under cane – about 100 000 ha – was flooded. In addition, because of the preceding drought, farmers are finding that it is more profitable to sell their cane for fodder than to factories. As a result, the 2019/20 sugar production is expected to fall even lower than previously forecast to between 5.2 and 5.3 million tons. The state typically produces over 10 million tons.

2018/19 THAI PRODUCTION HIGHER THAN EXPECTED

Sugarcane production in Thailand has now been put at 131 million tons for the year just ended – 10 to 15 million tons more than expected. Recovery was also higher than expected so the market is awash with Thai white sugar and traders are reported to be struggling to find markets.

CHINESE PRODUCERS WANT TO RETAIN TARIFF BARRIER

Unsurprisingly, Chinese sugar producers want the government to retain the high tariff on 'out of quota' sugar after it is due to expire next May. It will be interesting to see how the government will react to internal pressure on the one side and external [WTO] on the other. Watch this space!

LDC FORECASTS BRAZILIAN OUTPUT

Biosev, the LDC company in Brazil, is forecasting that ethanol will continue to be more profitable than crystal sugar for at least two years. It is predicting that in the Center South the 2019/20 year will produce marginally less crystal than the year just ended [25.9 million tons compared with 26.5 million] and 2020/21 will produce about 28 million tons. However, the increase is due to any increase in crop from 585 million tons in 2019/20 to 596 million the following year. Its ethanol figures are 30.9 million m³ [2018/19], 32.1 million [2019/20] and 32.1 million [2020/21].

BRAZIL'S MORENO GROUP FILES FOR PROTECTION

Grupo Moreno has filed for bankruptcy protection. It is said to have $480 million of debt. The company operates three factories with a combined capacity of 55 000 tcd. All three are in São Paulo state, one south of Ribiero Preto and two north west of that town.

ALLULOSE TO BE MADE IN CALIFORNIA?

In August we reported that an India company was to set up a plant in Oman to make, inter alia, allulose, a low GI sweetener. Last month, a company called Blue California announced that it would be setting up a facility to make allulose as soon as it received confirmation from the FDA that its product was 'generally recognized as safe'.