Monthly Archives: March 2011

Sugar prices fall as India allows OGL exports

Contrary to some expectations India has allowed 500,000 tonnes of sugar exports under its Open General licence (OGL).  Despite forthcoming local elections and some concerns over agflation India has permitted the full 500,000 tonnes for export. Previously 200,000 tonnes had been expected following comments in recent days.

It is expected that over 1 million tonnes of sugar for export will be approved under OGL during the year once India has confirmation of the size of its crop.  India is the world's second largest grower.


India procrastinates at the expense of exporters

India is still to announce whether the decision to permit 500,000 tonnes of sugar for export is to be ratified.  Sugar prices have fallen sharply recently and India’s indecision may cost exporters if after delays the panel of ministers approves sugar exports under its Open General Licence (OGL).

India is the world’s second largest producer of sugar after Brazil. The delay in confirming OGL exports had been to ensure sufficient domestic supplies and to avoid the impacts of agflation.

India is expected to produce between 24.5 million tonnes and 25.5 million tonnes of sugar.  Indian consumption is in the region of 22 million tonnes. Indian whites were available at $720 per tonne down by approximately $50.

Indonesia fails to buy sugar by tender

Indonesia’s  state sugar buyer PT Perkebunan Nusantara X has failed to buy over 40,000 tonnes of white sugar by tender on more than one occasion.  State buyers are granted permits to import white sugar to make up expected deficits arising from lower domestic production.  State buyers are tasked with buying 450,000 tonnes but so far have only managed to buy approximately 10% of this quota.

Thailand sugar crop larger than expected

Thailand is forecast to produce approximately 7.8 million tonnes of sugar during the 2010/11 season.  Initial forecasts were for 6.8 million tonnes.  Crushing will end next month in Thailand, the world’s second largest sugar exporter after Brazil.

A larger crop in Thailand and expected decreased demand from Japan has seen prices drop recently.  China and Indonesia may step in to fulfil their buying requirements at such price levels.

Thai whites were offered at a premium $25 above London No. 5 which is down from the recent $40 premium. While Thai raws were offered at a premium of 200 points above New York No. 11 which is down from the recent 280 point premium.  Demand seemed to be weak for Thai raws of Japanese specification.  Thai premiums may weaken further as a result of the larger than expected crop, weaker demand from Japan and the possibility of Indian exports becoming available.

BNDES provides $593 million in loans to ethanol sector

BNDES of Brazil is to provide 1 billion Reais ($593 million) in credit to the ethanol sector over the next four years to fund development of technology.  The funding is to develop technologies in connection with  ethanol and cellulosic ethanol.  The move is seen as a bid not to lag behind North America in developing second generation ethanol technologies.

Brazil was the world’s largest producer of ethanol before being overtaken by the US.  Brazil primarily uses sugar cane as feedstock for ethanol while the US primarily uses corn.  The US now produces twice the amount of ethanol produced by Brazil.

The loans will be to fund research and are available from BNDES and FINEP, an arm of the Science Ministry.

Earthquake damages sugar refineries

Following the earthquake last week sugar refining in Japan is now focused in the west of the country away from affected regions. Two refineries were damaged in Chiba.  Although the damage is thought to not have been too serious.

Japan has 12 sugar refineries and imports approximately 1.5 million tonnes of raw sugar per annum.  Domestic raw sugar output is approximately 650,000 tonnes.  Japan makes up approximately 1.5% of global consumption.  Thai sugar for the Japanese market was not being offered following the earthquake.

Efforts are ongoing in Japan to cool two nuclear reactors with water.


Delays at the port of Paranagua, Brazil

The railway that transports softs to Brazil’s second  port of Paranagua has reopened at a time when the main roads to the port are closed following heavy rains that damaged bridges, roads and railways in the area.   The America Latina Logistica railway is now operational beyond the Serra do Mar Mountains and the area leading to the port.

Trucks are in a line up some 50 km from the port and movement is restricted and slow.  Most of the highway was damaged due to heavy rains and mudslides.  Traffic in both directions is now proceeding with delays on one of the four lanes.

Naturally, there will be delays experienced in shipments from Paranagua.  The repairs required for the highway to be reopened and become fully functional may last three months.