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Not a bad month for news :
The world price has continued its downward drift, finishing May in the mid 16 US¢/lb range, proving that what looked like a bottom some two months ago was nothing of the sort :
However, Kingsman issued a somewhat bullish forecast towards the end of May which predicts that the world surplus will decline in the 2013/14 year with Brazil, India, Europe and Russia all lower than previously expected. The report still expects Brazil to have a good crop, however it is expecting only 45% to go to crystal sugar as the ethanol market continues to be attractive. The others are expected to show real declines in output.
EU commission has confirmed that it raided the offices of ‘several sugar companies’ in late April over concerns that there was pricing collusion in the white sugar market. It would not say which companies or even which countries were involved. Are we about to see another case like the old Tate and Lyle / British Sugar one?
England has a ‘recommended list’ of beet varieties, the latest edition of which has just been released. It is reported that over the last ten years the mean root yield has climbed from ~73 t/ha to ~90 t/ha and sucrose content has risen too so sugar yields in variety trails [not commercial crops] have risen from ~13 t/ha to nearly 17 tons in the same period. There are those that say that most of the increase is climate related however, and not variety related as demonstrated by a recent paper.
Also in England, this spring the British Beet Research Organisation is investigating poor germination in East Anglia, trying to identify a cause. As much as 40 to 60% of some crops are apparently affected. It seems not to be variety related and no disease has been identified.
Now we are confused. We had understood that the Serbian sugar company Sunoko was on track to buy it but earlier in May the Agriculture Bank of Greece announced that it had agreed to sell 30 million shares to France’s Cristal Union for €40 and that bidders from Poland and Bulgaria were the stand-by candidates if the deal wasn’t completed.
A new beet sugar project called Al-Nouran Sugar has been announced for the eastern delta. For a change this one seems to have the funding in place with the announcement coming from a body called the Islamic Corporation for Development of the Private Sector. The cost is reported to be $372 million [assumed to be US] and the annual capacity to be 500 000 tons although it is also claimed that it will reduce Egypt’s 1 million tons sugar imports by 25% so something is wrong somewhere.
In mid May the official news agency of the Sudan announced that the government was seeking to partially privatise its four fully public sector factories, Assalaya, Guneid, Halfa, Sennar. 70% of the shares in each are up for sale. However, later in May the National Assembly of the country announced that it opposed privatisation. What is not clear is what power the Assembly may have in this situation.
Despite only producing 494 000 tons in 2012, the government of Kenya wants to be producing 1 million tons per annum by 2015, according to the Kenyan Sugar Board. The statement was made at an exhibition of Indian sugar technology in Nairobi.
Part of the plan is to build a new sugar project at the Turkwel hydroelectric project in the far north of the country near Lake Turkana where there has long been a proposed but never implemented irrigation scheme. The Indian government is reported to be funding the project.
It seems that the Busoga sugar project of Sugar and Allied Industries Limited in central eastern Uganda is still going ahead but not according to the original plan. We first reported the project in May 2012 when the company said that it would ‘soon start’ its project. In November we reported that it was accused of ‘stealing’ land from the farmers. Now the farmers are complaining that the factory is not operational, having been promised that production would start in January this year. The company is telling them that it was delayed by rains and will actually start about the time that you read this. We now know that it will have a capacity of 2000 tcd.
Dangote has pulled out of its proposed sugar refinery project in Algeria in order to focus on raw sugar production in Nigeria. Rather fancifully, it is stating that the objective is to produce 1.5 million tons of raws by the 2018 crop. Raw sugar doesn’t have a good track record in Nigeria.
It also has to contend with its new refining competitor in Lagos, Greek owned Nigerian Flour Mills, which seems to be making progress with commissioning as it has launched its own sugar brand on the market.
Rwanda’s only sugar factory, owned by Uganda’s Madhvani Group, has been forced to close for an extended period due to a shortage of cane following severe flooding of its small estate. The company plans to reopen in June but what it really needs is more dry land : the estate seems to be in the middle of a swamp.
It is difficult to get a good perspective on what is happening in the Lowveldt but what is sure is that Tongaat Hullet is coming under a lot of pressure, including a move to deprive it of its estates. If that happens then the industry will collapse. Other snippets include a group of local ‘farmers’ complaining that the company has not developed [including providing full irrigation] and handed over to them the 4000 ha that it said that it would but if the government was telling you to hand over 30 000 ha of perfectly good estate, would you? There are also reports that the Mutirikwi dam is only 17% full as the country goes into the dry season.
The first commentaries on the deregulation actions taken by India in April started to arrive last month. Most seem to be favourable. One report, from Rabobank, rather shocked however : it pointed out that the national industry had almost US$ 2 billion of sugarcane arrears.
Last month we reported that farmers around Maryborough’s Tableland mill had switched their cane to Mackay’s Mossman mill because Maryborough refused to sell its sugar through Queensland Sugar Limited [QSL]. It now emerges that Maryborough has signed with QSL but on the same basis as Sucrogen and not as before. That leaves the farmers having to transport their can over extended distances for nothing. Sugar politics!
Although the EU will not support the military regime in Fiji or the Fiji Sugar Company, it turns out that it is still injecting about €50 million of aid to the industry each year via NGO’s. The money is apparently used to improve drainage [reduce erosion] and roads and to provide agricultural extension services to farmers.
There is currently a surplus of sugar in the USA and hence depressed prices – to the extent that there is talk of producers forfeiting on loans as they did in 2000. The government is reported to be considering giving surplus sugar to quota countries in exchange for them not shipping their quota. Where does that leave port refiners?
Meanwhile, the US Farm Bill has survived another attack on the sugar provisions with the Senate voting down an amendment which would have removed industry protection by 54 votes to 45.
It seems that the Chinese are not doing a very good job with their three factories in Jamaica. The main factories of SCJ [Frome, Monymusk and Bernard Lodge] were bought from the government by Complant in 2011 to form Pan Caribbean Sugar. The 2012/13 production was only 54 000 tons compared to 65 000 tons the previous year.
It is reported that Gusuco’s first crop production [Guyana has two part crops each year because of the rainfall pattern] was only 48 000 tons so it might not even match the poor performance of the dark years in the 1980’s when annual production fell below 150 000 tons. It was only when the company went back under foreign management that production rose to >300 000 tons. Perhaps that has to happen again?