Posted: Wednesday, May 25, 2022. 6:46 pm CST.
By Rubén Morales Iglesias: India, the world’s second-largest sugar producer behind Brazil, has decided to limit its sugar exports to 10 million metric tons for the rest of the sugar year ending in September. That move could cause a shortage and drive sugar prices even higher, but for Belize that could prove to be beneficial as it can help open new markets for our sugar.
International sugar prices spiraled by 20% over the last year, according to the Business Insider. Prices have been driven up by several factors, including the COVID-19 pandemic, the global energy prices which have skyrocketed, the Russia-Ukraine war affecting the supply of food and fertilizers, plus the move by several big countries like India restricting their exports to counter inflation.
“This is wonderful news for all sugar producers in the world. Unfortunately, we are very small, but it will positively impact our economy and the economy of the cane farmers,” said Marcos Osorio, Chairman of the Sugar Industry Control Board (SICB).
Osorio said that apart from India restricting its exports, Brazil the largest producer is also doing the same and is producing biofuel from sugar-based ethanol to counter the rising fuel prices.
But even before India’s decision to limit its exports, Belize has been proactive.
“Belize has been on an aggressive move in sourcing and securing more markets to have more options, especially when prices are down,” said Osorio. “BSI/ASR has been opening new markets. They have been looking at the Middle East. That’s a major area they’ve been looking at as a market for Belize.”
Osorio said Belize stands to gain from the situation of the world sugar market.
“This means a good opportunity for Belize in terms of getting a better price for our sugar and we believe this will also run into next year. Prices have been increasing recently as a result of the crisis between Russia and Ukraine. It simply means that Belize’s sugar will see an important increase in terms of revenue from the sales.”
Osorio said that Belize’s sugar production has been averaging 1,200,000 tons of sugar cane which usually yields around 125,000 tons of sugar. However, this year with production already at 90,000 plus tons of sugar, the projection by the end of the crop is for 130,000 tons of sugar or better.
“If we can achieve that it simply means a larger revenue stream for Belize, particularly for the Northern sugar industry. It will translate to better prices paid to cane farmers, an important impact on the national economy,” Osorio said.
Osorio said that the conditions have played out for a good sugar-producing season and he wished we could be in a position where we can produce far more.
“This year the climatic conditions have been good, the mill has been performing better than other years, farmers have been doing their part in terms of their better harvesting practices, so presently we have a year with a very good quality which then results in higher sugar output,” he said.
“We are hoping if the weather continues to hold, … yes, we had some rain yesterday and the day before but it’s not impacting much on the harvest, … we estimate we can make more deliveries to the mill so it can receive over 1.2 million tons of cane and given the cane quality, we would hope that we can get over 135,000 tons of sugar.”
Osorio said that after subtracting the annual local consumption of approximately 13,000 tons, Belize would have about 122,000 tons of sugar for export.
“We can export as much as we produce. With the present situation in Brazil and India, if we had 200,000 tons of sugar, I can assure you that the market would be there asking for that sugar at very good prices.
“The prices we are estimating will keep rising. We hope that it can reach US$0.25 per pound. If that happens farmers will have a very good year in terms of returns on their sugar cane production.”
Osorio said that right now Belize is selling its sugar at US$0.05 per pound higher than usual.
“Information we just got from the mill is that we are selling at US$0.19 per pound which is a very good price compared to the past years when we were selling at US$0.15 and US$0.14 per pound. Generally, the price is good for this year, and we are hoping we can fetch a few more cents in the latter part of the sugar cycle.”
However, Osorio said not all sugar sells at the same price and that we have to bear in mind that Belize sells part of its production in the futures market.
“That means that Belize sold part of its sugar even before we started the harvest season, so that is already locked at a price. So, it is from the other sales that are made on demand that would benefit from higher prices than we are foreseeing will happen in the upcoming months,” he said.
Osorio said that about 30,000 tons of Belize’s sugar were sold in the futures market at a secured price of US$0.17 of US$0.18 per pound.
As to the India move, Osorio feels their sugar export restriction is also a marketing strategy.
“I believe India is looking into the future. They will hold their sugar and then sell it later on when prices are even higher. That is a marketing strategy. I believe they will comply with what they have compromised in terms of the volumes of sugar for export and they will hold any excess they have and sell later at a higher price.”
In the meantime, Belize stands to benefit.
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