Discussion On Sugar

[sugarman]

Hi,

I am a research analyst in the sugar industry. I am happy to find this forum and glad to see it so active. It would be a good idea to start a discussion thread on sugar so I welcome all friends within the sugar industry to participate here. Questions on everything about sugar are welcomed and we can all chip in to make this thread a lively one. Cheers.

[bubbaba]

Are you located in Thailand? Have you ever been to Thailand? I ask, because most, if not all foods cooked in Thailand contains sugar. Maybe Thai's are the sugar industries best customer.

[chownah]

What is a "research analyst"?

[RamdomChances]

Tough crowd here tonight

Welcome to the forum sugar man. There's a few thread on sugar growing around just do a search. Are you just involved in the prduction side or do you have any experiance in the cultivation aspects ?

[sugarman]

Hi all, thanks for replying.

bubbaba, I am based in Singapore. I work for a trading company and my area of responsibility is primarily around the Asian region. I must admit I just started 3 months ago but definitely I have learned quite a bit on the sugar industry in Thailand in that time.

chownah and RandomChances, my job as an analyst is to monitor sugar trade flows. We speak to sugar groups who are involved in production and export. Not really involved in farming but I know that it is definitely important to learn from the growers too.

I hear news that crushing of sugar cane might stop completely end of this month and also that sugar mills might continue to crush cane after Songkran festival. Any kind soul be able to tell me anything on this?

I may not be involved in farming but I am more involved in the world market trade and prices. Any questions you may have on the world market or this region in general you are welcomed to ask. If I am not able to answer, some other person in this forum might! This is the aim of this thread after all. Thanks.

[Gary A]

I posted sometime back that an enterprising young man could do well here. Sugar cane is still cut by hand and transported long distances to the crushing mill. It is about 100 kilometers from here to the mill at Chum Pae. There is so much cane that is diverted to manufacturing ethanol that the price of sugar has gone up but the price of cut cane has gone down ??? Government ???

If a mechanical harvester were brought in and a crushing plant set up nearby, I think there would be big money to be made here. Since the sugar used for making ethanol can be syrup the mill would not have to meet sanitary standards. There would be VERY little energy usage and the transport costs would be reduced by about a factor of seven. Actually a farmer's co-op would be ideal.

[sugarman]

Below is an article on today's Bangkok Post.

Board set to limit sugar to be exported

Ministry fears use of domestic supply

YUTHANA PRAIWAN

The Cane and Sugar Board is considering a plan to limit sugar supply for the export-oriented food and beverage industry, as its actual consumption is below what has been requested, according to Chakramon Phasukvanich, the permanent secretary for the Industry Ministry.

The board discovered that 54 out of 80 export-oriented food and beverage operators used less than 70% of the requested sugar set aside for exports.

Mr Chakramon, who is also the board's chairman, said operators asked to use 360,000 tonnes of sugar allocated for export, but actually consumed only 280,000 tonnes last year.

''There are suspicions that the operators may use the sugar supply earmarked for local consumption instead of that set aside for export for their food and beverage production, since domestic sugar prices are 20% cheaper than the world price,'' he said.

Local sugar prices in 2006 were much cheaper than the world price, causing a severe shortage of local supplies.

''We have insufficient evidence to prosecute suspected wrongdoers who used sugar supply earmarked for local consumption,'' said Mr Chakramon.

Although data showed consumption of sugar set aside for exports fell last year, the board wondered why the operators requested less sugar this year even though the food and beverage industry expanded.

To solve the problem, he said, the operators would be required to request only the supply of sugar earmarked for export. Any operator that consumes less than 70% of requested sugar would have its quota limited to that amount the following year, said Mr Chakramon.

The board imposed a pre-harvest sugarcane price for the 2006-07 milling year at 800 baht per tonne based on a 10 commercial cane sugar (CCS) level.

A source on the board said many sugar mills under the Wang Kanai Group owed sugarcane planters 924 million baht for unpaid crops as of March 22 of this year.

TN Sugar Industry Co owed the planters 346.42 million baht, while Refined Chai Mongkol Co owed 278.72 million baht and Ang Vian Industry Co owed 316.93 million baht.

[Gary A]

The information I got from a local farmer may or may not be accurate, but he said that last year he got 1,085 baht per ton and this year he got 850 baht per ton. That's quite a difference.

[sugarman]

yes gary, and may I know which region was that farmer from? I believe the payment for cane differs between regions. Thanks

[Gary A]

yes gary, and may I know which region was that farmer from? I believe the payment for cane differs between regions. Thanks

We're in Loei province about fifty kilometers south from Loei city. Lots of sugar cane grown around here and MANY of the farms are off narrow dirt roads. That means the cane is hauled out on smaller trucks then transferred onto bigger trucks with trailers. LOTS of work involved.

[sugarman]

I see..

OCSB has upgraded the total cane harvest estimate to be ard 62mil tons. I believe it should reach 63 mil tons.

Do you guys think the harvest will go on after Songkran festival?

[Gary A]

I see..

OCSB has upgraded the total cane harvest estimate to be ard 62mil tons. I believe it should reach 63 mil tons.

Do you guys think the harvest will go on after Songkran festival?

Certainly it will go on. I'd estimate that at least a third of the cane here is still standing. I don't know about the sugar mill but I'd be VERY surprised if it shut down for more than a couple of days for the holiday.

[sugarman]

That's very encouraging to hear. From what I know, the daily total cane crushed in Thailand is around 240,000 tonnes per day as at 28 Mar and its dropping fast.

Do you guys usually know which mill your cane will end up with?

[LoveDaBlues]

950 per ton around my wife's village. the workers get paid 1 baht for each 'bundle' of cane they cut. A 'bundle' contains 15 cane stalks. Great pay, huh?

[Gary A]

950 per ton around my wife's village. the workers get paid 1 baht for each 'bundle' of cane they cut. A 'bundle' contains 15 cane stalks. Great pay, huh?

My wife says that people cutting cane here make big money. Ten stalks is 1 baht. The people loading the trucks get paid a daily wage.

[tim armstrong]

yes gary, and may I know which region was that farmer from? I believe the payment for cane differs between regions. Thanks

We're in Loei province about fifty kilometers south from Loei city. Lots of sugar cane grown around here and MANY of the farms are off narrow dirt roads. That means the cane is hauled out on smaller trucks then transferred onto bigger trucks with trailers. LOTS of work involved.

We live west of Nakhon Sawan. The very large overloaded double boggie trailers roll past our house 24/7, 15 hours a day for a solid 3 months. I dont know the stats, but this area must have one of the highest production rates. This years harvest seems no different to last year. At any one time there are about 200 trucks in the waiting areas near the local mill. I think there is one mechanical harvester for the region. No doubt the potential job losses would cause some resistance to any more.

On a related issue - the mill churns out cane waste mulch which an enterprising local sells cheaply. I used some last year but I'm not sure its much good. Does anyone else use it, and ist it full of chemicals from pesticides etc ??

[sugarman]

yes gary, and may I know which region was that farmer from? I believe the payment for cane differs between regions. Thanks

We're in Loei province about fifty kilometers south from Loei city. Lots of sugar cane grown around here and MANY of the farms are off narrow dirt roads. That means the cane is hauled out on smaller trucks then transferred onto bigger trucks with trailers. LOTS of work involved.

We live west of Nakhon Sawan. The very large overloaded double boggie trailers roll past our house 24/7, 15 hours a day for a solid 3 months. I dont know the stats, but this area must have one of the highest production rates. This years harvest seems no different to last year. At any one time there are about 200 trucks in the waiting areas near the local mill. I think there is one mechanical harvester for the region. No doubt the potential job losses would cause some resistance to any more.

On a related issue - the mill churns out cane waste mulch which an enterprising local sells cheaply. I used some last year but I'm not sure its much good. Does anyone else use it, and ist it full of chemicals from pesticides etc ??

From what I know, this year's total harvest is better than last year. Last year saw 46.7 mil tons of cane harvested. This year, the figure current stands around 61.5 mil tons. Around half of the mills have stopped crushing cane. The final figure all depends on the date crushing will end totally.

[sugarman]

Hi all, hope everyone had enjoyed Songkran.

I suppose the sugar crop harvest is coming to an end soon. World prices aren't looking too good at the moment. Probably due to the anticipated world surplus and also the Indian export subsidies that was announced recently.

I have a question on the future crop, and hope someone can answer my query. Looking at the current world price, which is relatively low, and in stark contrast with the high prices seen last year, how would the current world price affect new plantings of sugar cane?

I am aware that the provisional cane price paid this season was largely decided last year. However looking forward, if current world prices continue to hover around this level, I am curious whether this will affect new plantings and hence the size of future crops.

Many thanks.

[Maizefarmer]

Hi

I grow 450rai of cane - so heres my 2cents worth on the subject.

How will world price (low or high) impact the next "slash" (cutting)?

It won't - the Thai cane harvest is what is known in the business as a "spot crop". It means the price at the time the cane arrives at mill is what determines what the farmer will gross/nett (gross/nett - depending on whether he is selling on contract to a partricular mill or is dependant and has no committment to any mill or mill quota).

Yes - prices are low currently and are expected to remain low.

Heres a brief intro to the state of the cane industry in Thailand.

Problem Number 1 in Thai industry is logistics. The transport infrastructure supporting cane transportation from the field to the mill at harvest time is woefully inadequete. The primary promblem under this heading is/are high cost(s) which stem directly from lack of consilidation - consolidation meaning, there are too many sectors (a sector been a journey from one point to another before arriving at the mill) between the mill and the field.

A typical journey taken by a harvested load of cane goes something like this in Thailand:

a) Cut on field, loaded onto Truck, or tractor and trailer - taken to centralised point.

Offloaded and re-loaded onto a 2nd truck, or off loaded and craned onto a railway unit at a siding.

c) In the later case above, it is then moved to a siding closer to the mill, off loaded again, and re-loaded truck/trailer

d) off-loaded again at mill (where it is weighed).

e) then dragged or pushed from yard to crushing area.

In summary there are often 2 or 3 sectors which need to be undertaken to get a load of cane form the field to the mill. By contrast the African and Cuban cane industries seldom involve more than one sector from field to mill. The consequnce is a doubling (if not more) in the perosnel required to handle the cane, a doubling in facilties needed, a doubling in trucks, a tripling in time - ultimately all leading to significant increase in logistic costs. To understand the effect this has on gross versus nett quckly shows a vast discrepency in farm gate price versus what the grower ends up with in his pocket i.e. his margin is well "slashed" due to inefficiency. The problem is entrenched and logn standing - it is how the transport infrastructure was developed historically in Thailand - with growers just doing the growing, and with transporters often not having trucks in good enough condition to undertake long journeys. Just too many people involved in getting cane form the field to the mill.

In the North East of Thailand this is the single biggest cost of Thai cane farmers - "set" purchase (cane is grown from a length of cane stalk known as a "set") and fertilser is normally the biggest cost in cane production - not so in the NE. It is transport.

Compounding the issue is the cost of diesel fuel - it has outstripped the rise in world cane prices and the Thai "spot" market price.

Cut Cane Quality.

A spin off from poor logistics is the increase in time it takes to get the cane form the field to the mill. This impacts the quality of the product - cane degrades in weight and sweetness the longer it takes to get to the mill. Not only is wieight a consideration - mills also pay according to sweetness (which is why bigger is not always better and choosing a cane type or hybrib for your conditions as you experiance them at a micro soil and climatic condition becomes as importan a consideration as is anticipated weight at harvest time in Thailand - and for those of you inthe North East who are actually considering growing - your choices are primarily U - Thong 1 or Phil 66/07 varities - the latter been more suited for sandy soils and less rain/ mositure. The former been a crop which is grown for size to compensate more so for sweetness - but is best suited to darker heavier soils and higher precipertation rates. Collate info before each planting on expected rainfall for the next 12 - 18months).

Mill Only Logistics

The above are problems the farmer has to sort out, but over and abvove this there is the condition of the mil lto be considered. Most Thai crushing mills are poorly maintained (by international standards at least) and throuput is limited. In turn this impcts on the farmer. The avalibility of trucks and trailers is always in short supply come harvest time, but despite this, cane still piles up for days at the mill: a) waiting to be unloaded (it is not uncommon the transporters to have the rigs sitting for 3 - 5 - 7 days waiting in line for their truck to be unloaded becaus ethe mill machinary is processiong so slow. In turn the poor farmer sits with cane on the stalk (not wanting to slash it until he knows the truck is ready to move it straight away). This turns ties up the labour - who have to sit around twidddling their thumbs.

In summary poor mill only logistics impacts all three parties: the mill its self, the transporteres and the farmer. The impact on the farmer labour wise is estimated to be around 40% of his totlal cost.

So right form the start we ahve a huge in balance in cane production costs in Thailand - all down to logistics: some 90% of cane production costs are related to labour and logistics. Off hand I do not know what the African and Cuban labour/logistics costs are, but I'd be suprized if the account for more than 50% - 60% of overall production costs.

In conclusion, anyone thinking of growing cane in Thailand should do a carefull study 3 aspects BEFORE choosing the cane variety to plant?

a) How far are you from the mill?

What do transporters say is their average waiting time to be off-loaded for the mill in your area (there may well be an argument to move to a further away mill - I've had this experiance)?

c) What is the avaibility of labour come harvest time (remember - chances are you wil be cutting at the same time as everyone else - and if you pay above the going rate outside of family memebrs, you stand a chance of upsetting your neighbouring cane farmers))?

d) What is the vaibility of planting a 1 month early or a month late (to get round the high season bottle neck) - when you have looked into the above, now look into your cane options and planting to harvest time. Careful palnning now coul dsave you a nightmare scenario later.

And lastly NEVER NEVER burn your cane befor ecutting unless you are absolutely garunteed your tarnsporter will get it to the mill pronto pronto. Burning makes it easier to cut down, and will reduce your transportcosts by up to 30% because you will only be trucking the stalk and not the "trash" with it - which both takes up space and weight. The downside is: faliure to get the cane to the mill quickly can/will result in crystalisation in the field and loss of a signifiacnt part of the crop.

Good Luck

MF

[sugarman]

Hi Maizefarmer. Thanks for your reply. You must have taken quite some time to write this message.

I understand that there are other factors than price which influences decisions to plant new cane. Does this mean that price is not a big consideration in Thailand? After all, if the provisional cane price is higher, then it could cover the costs involved with logistics and net a higher figure?

For existing farmers, if they feel that the future returns they get from cane is declining due to lower world prices this year (which will affect the provisional price next season), would they then decide to plant other crops, taking into considerations the non-price factors?

Thanks.

[Loom]

For existing farmers, if they feel that the future returns they get from cane is declining due to lower world prices this year (which will affect the provisional price next season), would they then decide to plant other crops, taking into considerations the non-price factors?

Thanks.

Sugarman,

That would make sense for farmers taking "market" prices but it could take several years for inventories to adjust. My vague understanding of the Thai market is that the local price is relatively stable irregardless of the global market. If that's the case (and I don't know for sure), Thai supply wouldn't respond much. Any idea what the average "provisional" price has been in each of the past five years or so?

[seykota]

My understanding is that sugar is being used as an input in the ethanol refining process, is this correct? If so, what effect does this have, as the cane will not be going to a mill but to a refinery (in the Khon Kaen area)?

There was a meeting in our tambon recently, to encourage local farmers to grow sugar to supply the refinery in KK. As my Thai is limited (very) I have relied on 2nd and 3rd hand reports.

Seykota

[sugarman]

For existing farmers, if they feel that the future returns they get from cane is declining due to lower world prices this year (which will affect the provisional price next season), would they then decide to plant other crops, taking into considerations the non-price factors?

Thanks.

Sugarman,

That would make sense for farmers taking "market" prices but it could take several years for inventories to adjust. My vague understanding of the Thai market is that the local price is relatively stable irregardless of the global market. If that's the case (and I don't know for sure), Thai supply wouldn't respond much. Any idea what the average "provisional" price has been in each of the past five years or so?

Hi Loom,

Thanks for the reply. Firstly, here is the "provisional" and final cane price for the past 5 years.

Provisional Final

2002/2003 500.00 520.38

2003/2004 465.00 503.94

2004/2005 620.00 657.65

2005/2006 800.00 846.40

2006/2007 800.00 not out yet

As you can see, prices have shot up in the past 3 years but given that this year world prices have gone down, would it affect future crops? As I believe the provisional cane price for the next year will be based on this year's world prices. Or do you think it won't have any effect on future crops?

[sugarman]

My understanding is that sugar is being used as an input in the ethanol refining process, is this correct? If so, what effect does this have, as the cane will not be going to a mill but to a refinery (in the Khon Kaen area)?

There was a meeting in our tambon recently, to encourage local farmers to grow sugar to supply the refinery in KK. As my Thai is limited (very) I have relied on 2nd and 3rd hand reports.

Seykota

Hi Seykota,

Yes sugarcane can be used as a feedstock for ethanol production. But I understand that most of Thailand's ethanol are produced from molasses instead, though sugarcane is used but in much lesser proportions.

In Brazil, 45-50% of their sugarcane is used for ethanol production. Probably when Thailand decides to use sugarcane for ethanol production in that scale will it have more effects in this region..

[chownah]

My understanding is that sugar is being used as an input in the ethanol refining process, is this correct? If so, what effect does this have, as the cane will not be going to a mill but to a refinery (in the Khon Kaen area)?

There was a meeting in our tambon recently, to encourage local farmers to grow sugar to supply the refinery in KK. As my Thai is limited (very) I have relied on 2nd and 3rd hand reports.

Seykota

Hi Seykota,

Yes sugarcane can be used as a feedstock for ethanol production. But I understand that most of Thailand's ethanol are produced from molasses instead, though sugarcane is used but in much lesser proportions.

In Brazil, 45-50% of their sugarcane is used for ethanol production. Probably when Thailand decides to use sugarcane for ethanol production in that scale will it have more effects in this region..

Isn't molasses made from sugar cane in Thailand so sugarcane is the feedstock for ethanol production via the manufacture of molasses as in interim stage in the process?

Chownah

[Loom]

Hi Loom,

Thanks for the reply. Firstly, here is the "provisional" and final cane price for the past 5 years.

Provisional Final

2002/2003 500.00 520.38

2003/2004 465.00 503.94

2004/2005 620.00 657.65

2005/2006 800.00 846.40

2006/2007 800.00 not out yet

As you can see, prices have shot up in the past 3 years but given that this year world prices have gone down, would it affect future crops? As I believe the provisional cane price for the next year will be based on this year's world prices. Or do you think it won't have any effect on future crops?

World prices are down some 25% from last year's peak, but still up 50% or more from 1999/2000 lows. Still encouraging from a long-term view. From what I've seen of rice, production tends to repond to changes in pricing with a lag. I haven't seen any long-term production figures on sugar but it looks like an expected rise in production and global inventories from strong prices in previous years may have contributed to recent price weakness. I have no idea if sugarbeet and HFCS production has an effect.

[sugarman]

My understanding is that sugar is being used as an input in the ethanol refining process, is this correct? If so, what effect does this have, as the cane will not be going to a mill but to a refinery (in the Khon Kaen area)?

There was a meeting in our tambon recently, to encourage local farmers to grow sugar to supply the refinery in KK. As my Thai is limited (very) I have relied on 2nd and 3rd hand reports.

Seykota

Hi Seykota,

Yes sugarcane can be used as a feedstock for ethanol production. But I understand that most of Thailand's ethanol are produced from molasses instead, though sugarcane is used but in much lesser proportions.

In Brazil, 45-50% of their sugarcane is used for ethanol production. Probably when Thailand decides to use sugarcane for ethanol production in that scale will it have more effects in this region..

Isn't molasses made from sugar cane in Thailand so sugarcane is the feedstock for ethanol production via the manufacture of molasses as in interim stage in the process?

Chownah

HI Chownah, you are right.

What I meant was that in Thailand they rarely use sugarcane directly unlike in Brazil when the feedstock is sugarcane direct and not molasses.

[JungleBiker]

On a related issue - the mill churns out cane waste mulch which an enterprising local sells cheaply. I used some last year but I'm not sure its much good. Does anyone else use it, and ist it full of chemicals from pesticides etc ??

Hi Tim,

The common (English) name for the cane waste is bagasse, see: http://en.wikipedia.org/wiki/Bagasse

You can google the word bagasse to find out more about how it performs as a mulch.

I shouldn't worry about the chemicals, they will have been crushed out with the sugar juice! Just joking!

Many sugar cane mills use the bagasse to power the mill and also produce electricity to feed into the national grid. A few years ago, I heard the main product of many sugar mills in Thailand was electricity, and sugar was just a by-product! That was when sugar prices were low. Perhaps things are the other way around when sugar prices are high!? Sugarman may know more about this.

JB

[sugarman]

Hi everyone, hope you have enjoyed your holidays

I have a question on pre-crop finance for sugarcane farmers. Currently what is the structure for pre-crop fiance? Does mills advance farmers some funds in return for future delivery of sugarcane? I am hearing that the agricultural bank is now advancing funds direct to farmers, thus releasing the mills from this role. Though what I think is that even with this arrangement, the mills are still liable for the loans should the farmers default...

Can anyone provide me with some background or correct me if I am wrong...

Many thanks!

[Loom]

Any idea why export warehouse utilization has skyrocketed in recent months?