MONTHLY MOLASSES MARKET REPORT
Date: November 2018
Despite the sugar beet planting area being the same as last year, the drought has resulted in an expected 10-15% reduction in sugar beet crushed for the harvest. On top of this, beet molasses yield will again be significantly lower due to the drought which could mean an overall year on year reduction of beet molasses by 20%. In addition to this, the market may be faced with a large proportion of the fermentation industry entering the cane market aggressively and late, as there is suggestion the sugar mills have over-committed tonnage.
Cane demand looks set to significantly increase across Europe as we head into Q1 2019, due to the reduction of beet molasses available for both feed and fermentation markets.
High demand for pot ale syrup and other low value liquids from the AD industry has led to an increase in demand from CMS and an upward movement on price of £12-£15 /MT heading into Q1 2019.
Pakistan was expecting a successful harvest season with a potential for record levels. This has not quite come to fruition, and there is a slightly smaller crop than expected. 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 100k 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 and will be the most commonly imported origin into Europe for Q1 2019.
Thailand’s sugar cane crop could see 125 Million MT crushed. 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 will have a strong crop this year, which is good news for Europe as this eases the stress on India and Central America to supply the rest of Asia’s ethanol programs, hopefully freeing up supply for the EU & UK.
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 price 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.
Overall – It was hoped that prices would start to fall in Q1 2019, but this now looks doubtful as the European fermentation and feed industries look set to ramp up their cane purchasing in Q1 of 2019.