Date: May 2017
Planted beet Areas in Europe have increase on average 16%. Providing yield stays at a similar level to last year this suggests an increase in molasses available and a downward movement in price. However, there is also expected to be a dramatic increase in demand for molasses from the yeast industry. For the last few years some producers have been using sugar juice as stock, however it will now be more economically viable for the sugar producers to convert that into sugar and sell on the world market. So with yields as yet unknown and the increase in demand expected from the yeast industry, it is hard to guarantee that there will be an increase in supply available to the EU feed industry, however it is very likely.
Continental cane demand for Q 3+4 of this year and Q1 of 2018 is expected to be at historically low levels due to the abundance of beet molasses forecasted and a stable European grain market. However, it is expected that UK demand will stay high due to the fermentation industry using a beet/cane blend instead of sugar juice.
Logistics will prove difficult moving forward as the larger vessels (40+k MT) arriving into Europe will find it difficult to discharge part-cargoes due to lack of demand in regions with deep sea ports.
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 have exported 100kmt of product this harvest and are expected to increase this further.
The east coast of India has seen its first two molasses imports after an unusually poor molasses harvest this year.
Looking ahead to the next harvest there has been a sharp increase in planted sugar cane areas. However it is hard to predict whether this will be converted into a large molasses harvest until the monsoon has arrived in June.
After poor yields in the previous harvest resulted in Thailand defaulting on export contracts, it is hopeful the harvest this year will improve. However it is still unlikely that we will see large quantities available for export.
Indonesian molasses has seen an increase of around 5% from the last crop season. However, it is expected this will be swallowed by a strong local demand before it reaches the export market.
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.
Harvest season is over in CA with all remaining cargoes likely to be used to cover US demand.
Central America – Europe: Price increase
Asia – Europe: Price Increase
Bunkers: Price Increase
A large beet molasses harvest is expected across Europe and the planting sizes in Asia suggest the same. However at this point, with the monsoon season still weeks away, there will still be a large risk premium applied to any pricing.