Global Sugar Market Report

Dec 24 2012

Market Position
Following four years of production deficits and stock drawdown a global surplus of over 9 million tonnes is estimated for the 2011/12 season. Increased supply and reduced demand as a result of excellent harvests in EU, India, Russia and Thailand will result in lower prices on the international market in the first quarter of 2012. Consequently China, Indonesia and the US may decide to buy to rebuild domestic stock levels which would see prices raise again in the following quarter. The continuing Euro zone sovereign debt crisis will result in volatility on the international sugar markets. Extreme weather patterns over the last two seasons caused by La Niña/El Niño effect are unlikely to occur for a third successive season, which should lead to average temperatures and result in the 2012/13 season producing a production surplus and pricing stability.

Europe
Good weather over the European summer and autumn boosted sucrose yields and helped harvesting. The EU forecast for the beet crop is estimated at 18.2 million tonnes, close to 3 million tonnes higher than last year. Around 1 million tonnes will be produced out of quota which will result in a reduction in spring beet planting as out of quota sugar has to be carried forward to the following season. An increase in the use of sugar beet in the production of ethanol is likely and part of the CAP reform may see a re-introduction of the Irish sugar beet industry in the production of ethanol rather than sugar.

Brazil
Yields during the second half of the harvest continued the decline in the centre south and resulted in the allocation to sugar in preference to ethanol being the highest for the last five years. The north east region improved slightly increasing estimates for the Brazilian production to 38.5 million tonnes, down 2.5 mln tonnes on 2010/11 season. The focus is now on the 2012/13 crop with the replanting of the ageing cane which will see the planting of fast growing varieties allowing for harvesting in 12 months as opposed to the traditional varieties that take 18 months to develop. Note that a lack of rainfall during the middle of 2011 may result in poor productivity of this cane for the 2012/13 crop.

 

Thailand
The recent flooding in August and September delayed the start to crushing season and despite a promising start to the campaign the yields at the end of the crop reduced sucrose yields, reducing estimated sugar production to 11.2 mln tonnes compared to 10.2 mln tonnes in 2010/11. The possibility is that we have seen a peak in sugarcane production as the floods resulted in 2 million tonnes of rice production lost, increasing the rice price and the potential for increased rice hectares at the expense of cane.

India
The 2011/12 crop is now being harvested, early estimates are positive with the prediction of 27.6 million tonnes compared to 26.3 mln tonnes in 2010/11. The monsoon season delivered sufficient rainfall, although began slowly and protracted, delaying the beginning of the harvesting campaign. The growth of cane acreage in Uttar Pradesh in particular is slowing after two years of expansion although there has been a small increase in plantings this year. Mills in Maharashtra were slow to start crushing in the south with the availability of more cane than crushing capacity, limiting production estimates. Limited rainfall in the region during the start of the monsoon, will have delayed cane development reducing sucrose yields. Domestic prices remain high a reflection that stocks remain low as consumption has grown above population rates.

Australia
The country suffered from awful weather at the start of 2011. La Niña influenced rainfall in January followed by the tropical cyclone Yasi in February left a considerable amount of cane not harvested from the 2009/10 season which contributed to the slight increase in the 2010/11 crop which has just finished, producing 3.8 million tonnes.

USA/Mexico
Wet weather in September resulted in a slow start to the beet campaign and unseasonal warm weather could be further detrimental to the beet stocks stored outdoors, resulting in a further tightening of the domestic sugar supply. Following last year’s frost reduced cane harvest, the 2012 Floridian and Mexican cane crops are currently being harvested. The Florida crop is expected to increase by 6%, but drought in the later part of 2011 may affect the Mexican crop.

China
Higher prices resulted in China increasing the planted area for both cane and beet crops. 2011/12 cane is currently being harvested, after being delayed to try an improve sucrose yields. Estimated production is at 11.4 million tonnes, a 10% increase on last season. The beet yields are also predicted to improve to 1.1 million tonnes, totalling 12.5 mln tonnes for Chinese production.

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James Bond & The Stig Stuntman Raises over £160,000 For Motor Neurone Disease

Dec 24 2012

49 year old professional racing driver  Neil Cunningham who doubled for James Bond in the opening scenes of Quantum of Solace and later performed hair raising stunts as The Stig on BBC Top Gear has raised over £160,000 in charitable donations within four months. The money will be forwarded to Kings Hospital, London to help Professor Chris Shaw for his research into MND. Neil who developed MND in late 2010 felt that by publicising his condition he could bring more public awareness to the dedicated team who are working around the clock to find a cure for this debilitating and deadly disease.

In June 2012 a team of six cyclists completed an epic endurance bicycle ride across the UK, also climbing the summit of the three highest peaks in England, Scotland & Wales all within 3 days despite appalling weather conditions, raising £15,795.

Adam-Bere,-Ben-Williams,-Iain-Burgess-James,-Rob-Westcott,-Richard-Garner-&-Dan-Kerley

The six heroic riders were Adam Bere, Ben Williams, Iain Burgess-James, Rob Westcott, Richard Garner & Dan Kerley.

“Ragus was the first sponsor which really gave the whole campaign some life. They then persuaded Scheckter’s Organic to supply the energy drinks to keep the riders nutritionally hydrated and if that wasn’t enough our logo ‘Racing For Life’ got exposure on the race winning BMW in the British GT Championship. Thanks Ragus, I can’t thank you guys enough”.

Anyone wishing to donate towards MND can visit the link:

www.justgiving.com/pedalthepeaks2012?ref=nf

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Drought To Affect EU Spring Sugar Beet Planting?

Dec 23 2012

Market Position
A global surplus of around 9 million tonnes has been achieved from the 2011/12 season. Despite falling prices at the start of the year, since February there has been rising economic confidence, resulting in international sugar prices starting to rise as a result of risk premiums being priced into the market following last year’s Brazilian harvest. Commodities in general rose 4% in February, with oil and sugar rising by over 8%. The ongoing high prices appear to have had little impact on consumption. The Euro zone sovereign debt crisis and further deterioration between Iran and the West is starting to push commodity prices higher. The global production surplus has resulted in a pricing stability for the time being, although extreme weather patterns and the rising oil price would affect this stability going forward. Global sugar production is projected to reach a record 178.1 mln tonnes, 10 mln tonnes higher than last year, with 31% growth in the last decade to 2011/12.

Drought

Europe
In January prices in the EU reached their highest level since 2006. Supply tightness and shortages has led to the Committee of European Sugar Users requesting that European Commission allows local producers to sell an additional 600,000 metric tonnes into the domestic market and to allow further imports of 1 million tonnes to achieve stocks of 3.5 mln tonnes, which is 20% of consumption. 400,000 metric tonnes has been allowed into the domestic supply, adding to the 13.3 mln tonnes produced under quota. Total imports for 2011/12 is expected to be 3.1 mln tonnes resulting in closing stocks of 1.9 mln tonnes, 100,000 tonnes higher than in 2010/11. Looking ahead to the 2012 spring beet planting, there is considerable concern over a possible drought in Western Europe, in particular the UK where the major beet growing area of East Anglia has seen the driest winter since records began in 1921, with 30% below average rainfall.

Brazil
Forecasts for the 2012/13 crop is for an increase in sugar output at an estimated 33 mln tonnes. This is despite a second consecutive La Niña episode which led to dry weather in November through to February, a period vital for cane development. This in turn may lead to higher rainfall at the start of the harvesting period in May. Ageing cane, the oldest for 20 years may lead to lower sugar yields and the extra government funding for ethanol production and the end of US import duties on foreign ethanol may divert cane away from sugar production. The amount of rainfall between now and May will be critical to the cane production. Ageing cane, a surprise frost and flowering development during the 2011/12 season saw sugar production fall short of the estimated 33.5 mln tonnes at 31.3 mln tonnes, down 2.2 mln tonnes on the previous season, the first reduction in output in over a decade. As a result market is cautious regarding the estimate size for the 2012/13 crop.

Thailand
Cane crushing is progressing well due to ideal weather conditions, although there remains concern over the final sucrose yield as a result of the flooding in August and September 2011. Estimated sugar production is still expected to exceed last year to 11.2 mln tonnes. The start of the rainy season in the next month will determine the final throughput.

India
Year to date the 2011/12 overall harvest in Maharashtra and Uttar Pradesh is 15% higher than last year with sugar production expected to exceed the 2010/11 season by around 1 million tonnes to 27.8 mln tonnes, over 2 million tonnes higher than domestic consumption.

USA/Mexico
The US tight domestic sugar supply has been eased a little by a small increase in domestic production and a sharp increase in Mexican imports. Year to date the cane harvest in Mexico is down 7% to 5.4 mln tonnes and sugar production is down 14% with sugar consumption at 4.1 mln tonnes. US sourced High Fructose Corn Syrup has replaced 1.3 mln tonnes of the Mexican sugar consumption. Both the US and Mexico will be importing significant amounts of sugar in the middle of 2012.

China
Drought leading up to the cane harvest in the Guangxi region followed by rainfall since has reduced yields and the current estimate for the 2011/12 crop now stands at 6.8 million tonnes. In the north of the country the beet crop is also below initial expectations, so the estimate for Chinese production is 12.2 mln tonnes. The domestic shortfall of 3 million tonnes will probably result in China becoming the biggest sugar importer in 2012.

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Boris Johnson writes in the Telegraph that "Brussels is slowly beeting the life out of our sugar industry"

Dec 20 2012

It is one thing to show solidarity with the Scots by eating porridge for breakfast. But can you really face it on its own? Surely the thing is to add brown sugar or — better still — whorls of golden syrup. If you are like me, you take a childish pleasure in watching as it falls from the spoon, a glistening shaft of solid tawny sunlight.

For Boris’s full article please click here

Ragus was there at the start of syrup production we will continue to back Britain’s proud history of cane sugar making, thanks for the support Boris.

Eastick's Golden Syrup

 

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Golden Syrup: Innovation-Invention-Success!

Dec 20 2012

SEGRO latest marketing campaign today is proudly promoting Ragus’ Golden Syrup in a series of adverts alongside other icon manufactured successes, the Ford GT40 and Concorde parts produced on the Slough Trading Estate.

Segro Promoting Ragus Golden Syrup

SEGRO promoting Ragus Golden Syrup.

Eastick's Golden Syrup

Iconic Eastick’s Golden Syrup tin.

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Sugar Prices Soften As Improved Weather Helps Southern Hemisphere Harvesting

Dec 15 2012

 

Market Position

Weather patterns in the next six to eight weeks are likely to determine sugar prices for 2013. A general softening of world market prices continues as a result of improved weather conditions in the slow starting harvesting in the southern hemisphere regions, resulting in what will be a sizeable sugar surplus in quarter four. Weather related risks may still affect the global supply with mill maintenance work in Brazil being carried out in the second half of September due to wetter conditions. In the northern hemisphere regions of India and Thailand the amount of rainfall at the end of the monsoon season will be critical to the sugar supply. The current predicted global sugar surplus for the 2012/13 crop is estimated at 4.4 million tonnes following three years of stock drawdown. The Australian and Brazilian harvests are generally progressing well; North America volumes look good with Eastern Europe and the European Union predicting an average beet crop.

The-Cane-Trucks

Lorries carrying sugarcane in India.

Europe

As reported last month estimates for the 2012/13 beet crop is the production of 17.3 million tonnes of sugar, down from last’s year record crop of 18.5 mln tonnes. The campaign to process beet sugar has begun right across Europe. The beet crop has been affected by the cool and wet spring, although yields will be in line with the five year average. 2012/13 estimates for imported sugar is around 2 million tonnes. Russian and the Ukraine beet campaigns are well under way, but it remains to be seen how the summer droughts have affected the quality of the beets.

Brazil

The next two months will be critical to determining the outcome of the Brazilian crop. The weather has played a major factor in the harvesting of the 2012/13 crop, with the delayed start in April, followed by rains in June and late September. Dry weather is forecast for the tail end of the harvest which will be needed if production is to rise above 31.2 million tonnes. The export of sugar is the preferred option for the mills due to depressed domestic sugar and ethanol prices. Brazil is the world’s largest producer of sugarcane, of which half goes towards the production of ethanol.

Thailand

The lack of rainfall since the beginning of the year is likely to impact on the cane volumes for the 2012/13 season. Estimates for the cane crop has reduced by 3 mln tonnes to 99.6 mln tonnes of cane. Although this is an increase over last year’s 98 mln tonnes, the recovery of sugar will be reduced and is unlikely to match the 10.2 mln tonnes of sugar produced from the 2011/12 campaign. Harvesting is due to commence in November, with exports likely to be less than 7 mln tonnes exported in 2012.

India

Since July domestic sugar prices have risen by 20% and in the state of Maharashtra there has been a reduction in cane supplies, so the mills will be keen to start crushing the 2012/13 cane crop as early as possible. Early crushing will lead to lower sugar recovery and yields with the canes already affected by the lack of rains during the monsoon season. As with the Brazilian crop, the weather will determine the Indian harvest. Rainfall at the end of the year will reduce harvest yields, but improve the development of the 2013/14 crop; low rainfall will improve harvest yields but will be negative to the development of the 2013/14 crop. The risk to long term supply may result in India importing sugar as the country struggles with rising food prices.

Australia

Despite the Queensland rain showers in June/July, slowing the start to harvesting, dry weather followed for the following period contributing to an estimate of 4.5 mln tonnes production target for the 2012/13 campaign, with exports of 3.5 mln tonnes achievable. Cane crushing should be complete by mid-December. The 2013/14 crop will need extra irrigation and fertilisers as a result of the recent arid conditions.

USA/Mexico

With early plantings of sugar beet this year in the US, harvesting is well ahead of previous years, with the beets in excellent condition with estimates at 4.33 mln tonnes sugar from beet. Hurricane Isaac hit the Louisiana cane region, but with minimal damaged to the cane crop. In Mexico a wetter summer will produce higher cane yields and despite a reduction in planted area estimates for the 2012/13 crop is for the production of 5.3 mln tonnes of sugar.

China

Despite the recent record in domestic sugar production, China became the largest sugar importer in 2012.  The last few years has seen an increased usage in corn sweeteners at the expense of sugar. With the current high corn sweetener values as a result of record corn prices, we expect to see a switch back to sugar usage now that world sugar prices have softened.

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