Date: June 2018
Beet molasses prices have moved upwards in recent weeks as we enter the latter stages of the crop. Overstated crop size in Eastern Europe has meant the end of the beet crop has caught traders by surprise and has moved prices up $15/20 as the fermentation industry scrambles for the remaining cargo.
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 has had a successful harvest season with a potential for record levels. This however, will not increase the volume available for export. The rise in oil price has made Pakistani ethanol more attractive and they will look to use molasses as a stock for the coming season’s production. It is estimated there will be 250k-350k Mt of molasses available to export this crop season.
Similarly to Pakistan, India has had an excellent sugar cane harvest this year and molasses yields have also been strong.
The majority of this year’s crop, however, has been in the central areas of India. This means logistically it is very difficult to get the product to the port areas at world FOB levels.
The knock on effect of this is that India will most likely consume the molasses internally in its ethanol and rising alcohol production. It is estimated that exports will also be around the 200k -300K MT level.
Thailand’s crop will 25% higher than last year. However, as has been the case with Thailand for the past 4/5 years, most of the product will be used as stock in the state ethanol programs.
Indonesia/Australia have both had a large crop this year. This may have an interesting effect on world prices as it is usually shipped to Korea for their steel production. Korean steel, however, have switched stocks and no longer have a requirement. It remains to be seen of the prices move sufficiently lower to make the origins competitive for the European market due to the additional freight.
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.
Old crop prices in Central America are moving upwards in line with a strong demand from the US. Early prices for next crop look to be at a similar level as strong internal ethanol demand and strong export demand from US keep prices high.
Bunkers: Slight rice Increase
Freight – Steady
World FOB prices will be moving upwards as we head into Q4 and the old crop comes to an end in CA/ASIA, but hopefully will flatten out as we move into the new crop in Q1 2019.
Overall – FOB ($) prices expected to be slightly higher for period October-April 19.
NB – currency movement has increased prices CIF UK (£) by around £6 for both spot and winter business.