BRAZIL: Diana Bioenergia will achieve production goal for 2018/19: Sugarcane processor Diana Bioenergia, owner of a mill located in Brazil's São Paulo state, will reach its estimated production for the 2018/19 season due to a higher productivity measured by Total Recoverable Sugars (ATR), according to Brazil's Jornal Cana news website. Ricardo Junqueira, CEO of Diana Bioenergia, said that the severe drought has affected sugarcane production but generated much better ATR compared to the previous harvests. This will allow the company to reach its production goal of 70,000 tonnes of VHP sugar and 70,000 cubic metres of ethanol in the current harvest. Diana has processed 900,000 tonnes of sugarcane, and produced 39,000 tonnes of VHP sugar and 48,500 cubic metres of ethanol so far in the season (by Sept. 13). The total supply of sugarcane for processing, however, will be below that expected for the 2018/19 season. Junqueira estimates now that Diana Bioenergia will process 1.35 million tonnes of sugarcane in the current season, in comparison with 1.43 million tonnes estimated earlier this year. BANGLADESH: Sugar import duty sought while clearing 151,000 tonnes of stock: State-run Bangladesh Sugar and Food Industries Corporation (BSFIC) has urged the government to increase import duty on the sweetener to curb import and clear its unsold stock of 151,000 tonnes, corporation and revenue officials said, according to Bangladesh’s Star newspaper. The corporation comes with the plea as it is planning to start crushing sugarcane by the end of next month with the hope to produce 120,000 tonnes of sugar in 2018/19. The agency, which runs 15 mills, said it cannot sell its sugar as wholesale prices have fallen below its mill gate price of BDT50 (US$0.54) per kilogramme in recent weeks, said the officials. At the wholesale level, the sweetener refined by private processors, is sold at BDT44-45 each kg now, according to BSFIC Chairman AKM Delwer Hussain. Retail prices of sugar declined 8.7% year-on-year to BDT50-55 each kg in Dhaka now, according to data from the Trading Corporation of Bangladesh. If the current prices prevail, the agency will continue to incur losses and be unable to buy sugarcane from growers in the next crushing season. “We are facing a fund crisis as we cannot sell sugar,” he said, adding that state mills depend on locally grown sugarcane to produce sugar and farmers tend to shift to other crops when prices are low. Sugarcane acreage almost halved in two and a half decades to 233,000 acres in 2016/17 as farmers are getting reluctant to grow the crop that takes more than a year to mature but brings lower returns compared to other crops. “Farmers will not grow sugarcane if we cannot sell sugar at fair prices and provide attractive prices to growers,” said Hussain, explaining BSFIC's position in favour of duty hike. The corporation imported 100,000 tonnes of sugar last year to boost its stock and help the government keep prices stable. In its latest plea, the BSFIC called upon the government for increasing specific duty on raw sugar to BDT4,000 per tonne from existing BDT2,000 and imposing 25% supplementary duty apart from maintaining present VAT and regulatory duty. The hike will push prices of refined sugar to over BDT57,000 per tonne, according to the BSFIC proposal. The corporation also demanded hike in duty of white sugar to discourage imports of the sweetener. “We are examining the proposal. Decision will be taken based on discussion with the high-ups,” said a senior official of the National Board of Revenue (NBR). Hussain said the BSFIC mills once produced 270,000 tonnes of sugar. Its production slumped over time for a dearth of sugarcane in the face of falling cultivation. “The existence of state sugar mills depends on the cultivation of sugarcane. We have hiked sugarcane purchasing prices in three phases recently to encourage farmers to grow the crop,” he said. He said mills would be able to reduce per unit production cost if they get required amount of sugarcane. Import of raw sugar rose 20% year-on-year to 2.615 million tonnes in 2017/18, according to Bangladesh Bureau of Statistics (BBS). Tanvir Hydar Pavel, director for finance and commercial at City Group, which runs the largest sugar refinery, said prices will rise for the duty spike. "Consumers will have to spend more to buy sugar. The government should consider whether it can provide support to state mills through any other ways," he said. In May this year, the US Department of Agriculture (USDA) estimated Bangladesh's sugar consumption at 2.695 million tonnes in 2017/18, up 20% from 2.232 million tonnes in the previous year. It forecasted that total consumption would rise 10% to 2.980 million tonnes in 2018/19. The nation has to meet more than 95% of its sugar requirements through imports, according to BBS data. BRAZIL: Sugarcane machinery industry bets in replacement market: The machinery industry for the Brazilian sugarcane sector will now focus on the replacement market, according to Brazil’s Folha de S. Paulo news website. The end of sugarcane burning in the most part of Brazil boosted sales of harvesting machinery over the past couple of years. But most of the sugarcane industry has already bought the equipment necessary to make the transition from manual to mechanized harvest, and sales of harvesting machines slowed down last year, when 721 harvesting machines were sold. Roberto Biasotto, product marketing manager for agricultural and farm equipment company Case IH, said that one of the market's focus will now be on replacing machines. The sector will also target the sugarcane industry in the north-northeast, where mechanization is still at 25%. But the demand in the region is expected to be smaller than that verified in the centre-south, due to the topography and restricted areas where cane fields are located. Biasotto believes the adoption of new technologies will also generate demand, as machines are gaining efficiency every year and increasingly being used continually by the industry. RenovaBio, the national program to incentivize ethanol production and consumption, should also boost demand for machinery, according to Biasotto. Mario Ortiz Gandini, agricultural and technology director at São Martinho's mill in Pradópolis, São Paulo state, says that technology and automation bring savings. The Brazilian sugarcane industry replaces its harvesting machinery every five years, on average. But Gandini said that companies are continually calculating how much new technologies can bring advantage to the industry, and makes the decision on replacement based on these comparisons. INDIA: Further rise in MSP seen at US$0.47 per kilo: Following last week’s incentive package under which the price of ethanol was increased, another dose of incentives for over supplied sugar mills are on the cards, according to India’s Business Standard. The package being actively considered includes raising minimum selling prices (MSP) of sugar manufactured by mills to INR34 (US$0.47) and loan restructuring or similar incentives for cooperative sector sugar mills. Mills have been asking for raising MSP to INR37 and earlier, the government of Uttar Pradesh, the largest sugar producing state had recommended price of INR34. However, the government seems to have settled for INR34-INR35 as MSP. These measures will foster an increase in the open market price of sugar in both, the wholesale and retail segments, but the idea is to support the sugar industry, which is dealing with successive years of excess production. The move is apparently designed to help the mills clear farmers' cane dues. The government had already announced a package for sugar mills in early June with the creation of 3 million tonnes of buffer stock of sugar for a year, introducing an MSP of INR29 per kg below which mills could not sell and stock limits similar to the release mechanism prevailing five years ago. Last week’s package has seen the share prices of sugar companies skyrocket. In just one week, sugar mills share price composite index prepared by Business standard research bureau has increased 27.5% compared to a 0.35% decline in Sensex. Share prices of top 10 sugar companies in market capitalisation have increased around 40% in a week. The increase in MSP, essentially a direct hike in the factory price of sugar from the mills, will bring it quite close to their cost of production. Increase in MSP is also expected to indirectly facilitate quicker export of surplus sugar. Officials said a formal decision regarding the proposals could be considered soon. If approved, the new MSP of sugar would be around INR33-INR34 a kilogram, and the present market price is prevailing closer to this level. However, how much a higher base could impact the retail sale price and whether the government bites the bullet ahead of the big festival season when consumption of sugar rises, remains to be seen. Even if retail prices go up as a result of a rise in MSP, they will be lower than the prices prevailing a year ago. Industry players have been demanding that Centre immediately raise the MSP of sugar by at least INR7 per kg and fix a mandatory export quota of seven million tonnes in 2018/19 to absorb the surplus, which is poised to reach as much as 10 million tonnes ahead of start of the new season next month. The increase in MSP will take care of their financial requirement and they won’t need an additional subsidy from the government. Sugar exports are still unviable and the industry had also asked for higher incentives to help reduce surplus. However, for that government has to bear the burden of subsidy. If MSP is raised, mills will get the required support and burden will be borne by consumers. “Somebody has to pay -- either the government does through direct subsidy or the consumer pays by way of higher retail price, which will still be lower than last year,” a senior industry official commented. New York No 11 prices. Month prev Close Last Change High Low Time October 11.16 10.63 -0.53 11.12 10.6 12:00:00 March 12.02 11.58 -0.44 12 11.56 17:02:52 May 12.19 11.76 -0.43 12.15 11.74 17:02:52 July 12.29 11.88 -0.41 12.25 11.86 17:02:52 October 12.54 12.17 -0.37 12.51 12.15 12:00:00 London No 5 prices. Month prev Close Last Change High Low Time December 339.7 330.3 -9.4 338.4 329.9 16:59:58 March 340.5 332.2 -8.3 338.8 332 16:59:59 May 343.8 336.1 -7.7 341.7 336 16:59:01 August 346.4 339.3 -7.1 345 339.1 16:59:01 October 348.8 342.3 -6.5 347.5 342.3 16:59:01 Whites Premium based on current prices Months Premium Mar/Mar 76.91 May/May 76.84 Aug/Jul 77.39 Oct/Oct 74 Mar/Mar 69.37 May/May 71.99 Currency Info Currency Last Time Brazil Real 4.1688 17:44:58 India Rupee 72.44 16:13:04 Email provided by Sugaronline.com James Ormerod Office: +31 10 40 44 223 Mobile: +31 611 359 683 Email: jamesormerod@hotmail.com Office: james.ormerod@glencore.com