Date: January 2018
After a large sugar beet harvest across Europe, many factories are still in the crushing stages of the harvest. Early indicators of yield have been solid if not spectacular, however with the cold weather and frost moving in during the latter part of the season we could see this drop off. It is still to be seen if yield levels mean the increase in sugar beet is translated into an increase in molasses. With the cold weather causing a delay in crushing in Poland, there was a recent technical increase in price as the producers struggled to keep up with fermentation demand.
Cane demand has increased across Continental Europe as the price differential between the two products narrowed slightly during the early part of the beet crush. However, the demand for cane has not increased significantly enough to ease the logistical stress on UK imports.
Pakistan’s ethanol industry is suffering due to low fuel prices meaning their molasses based process is no longer profitable. This has led to some producers switching to grain or other raw materials to use as stock.
Pakistan exported 100k MT of molasses during last year’s harvest and after a large increase in Molasses harvested this year, exports looks set to reach 300k MT during this harvest.
Similarly to Pakistan, India has had an excellent sugar cane harvest this year and molasses yields have also been strong. India will be the origin of choice for the rest of Asia during 2018 and with an accompanying internal ethanol demand, the UK will face a battle over any cargos made available for export.
On the back of high quality sugar cane growing weather, Thailand has produced a very high amount of molasses. However, with a very high internal ethanol demand it is still to be seen if any molasses makes its way into the export market.
The early indications from Indonesia are that the cane planting sizes are strong, however with the harvest season not until April/May there is a long way left to go before it has any impact on world pricing.
A sense of balance has returned to the Asian molasses market in recent months. There has been a reduction in demand from the Philippines for their ethanol program which has flattened out the supply/demand curve. It will be interesting to see the effects this has on price, however it is still too early in the year to have a reliable view of the upcoming harvest seasons.
With Florida being hit by extreme weather, the US has purchased the majority of the remaining crop from Central and South America causing prices at origin to leap $15 in a very short space of time. 150K was purchased by the US from week 50 – week 1 alone.
Central America – Europe: Price increase
Asia – Europe: Price Increase
Bunkers: Price Increase
World molasses prices looked set to recover after the reductions of the past year, however healthy crops in India/Thailand/Pakistan could potentially hold this off for another harvest season. For this to happen however, it would require the increase in exportable quantities to mirror the increase in molasses produced at origin. It will be interesting to see how this unfolds as we head into Q2.