I: BACKGROUND This is September newsletter publication of Agriculture and Food Authority, It gives insights into how the period January September 2016 performed, focusing on the local sugar market prices; ex - factory, wholesale and retail sugar prices. Local sugar production, sugar imports, exports and the world sugar market. II: INTRODUCTION In the period January September 2016, the Sugar industry reported an increase of 1% in sugar production to attain 492,164 tonnes compared to 487,824 tonnes in the same period last year. Notable improvement in sugar production was observed at Butali, Transmara and South Nyanza Sugar companies during this year, which was attributed to better cane availability in these zones and expansion of Transmara sugar factory. It is also worth noting that Kwale International Sugar Company which had remained shut since the month of April 2016, began operation in mid - September, whereas, Muhoroni Sugar Company resumed operations following about two months closure for annual maintenance. Total sugar sales in January - September 2016 were 480,018 tonnes compared to 470,567 tonnes sold in the same period 2015, an increment of 2%. The increase in sales is attributed to improved sugar production over the period and the rising domestic sugar demand. Sugar closing stocks held by the factories at the end of September 2016 were 7,481 tonnes compared to 10,950 in the same period last year; low level in this year is attributed to increased sugar sales as discussed above. More details on sugar production, sales and closing stocks are given in the Table 1 below. Table 1: Sugar Production, Sales and Closing Stocks January September 2016 and 2015 Company Total Sugar Production Jan Sept (T) Total Sugar sales Jan Sept (T) Closing Stocks September (T) 2016 2015 2016 2015 2016 2015 Nzoia 55,003 56,301 49,833 59,866 839 191 Chemelil 15,817 18,072 15,853 18,097 0 86 South Nyanza 46,662 42,540 45,721 41,202 696 1,349 Muhoroni 14,712 23,043 14,725 23,313 168 7 West Kenya 86,995 92,916 86,495 92,287 1,593 1,724 Mumias 41,318 49,957 42,653 48,088 99 362 Kibos 50,930 61,781 50,302 50,167 394 322 Butali 72,326 36,385 67,550 36,496 782 0 Sukari 37,447 48,983 36,371 48,135 456 1,022 Transmara 66,886 50,875 66,283 50,836 851 996 Kwale 4,068 6,971 4,500 2,080 1,603 4,891 492,164 487,824 480,018 470,567 7,481 10,950 Total 1% Production 2% Sales Increase 32%Stocks Increase Decrease Sugar Market Newsletter
III: LOCAL SUGAR MARKET a) Ex-Factory Sugar Prices The Ex - factory sugar prices in the month of September 2016 ranged between Kshs. 4,400 and Kshs. 5,800 per 50kg bag. The monthly average was Kshs 5,113 against Kshs 3,929 per 50kg bag observed in September 2015, thus posting an increase of 30%. The price increase is attributed to the reducing sugar stocks in the country and higher cost of imported sugar due to prevailing global sugar deficit (our country s sugar deficit is met through imports). Overall, during the period January - September 2016, ex-factory sugar prices ranged between Kshs. 3,500 and Kshs. 5,800 giving a mean price of Kshs. 4,346 per 50kg bag compared to an average of Kshs. 3,781 per bag in the same period 2015, a 15% increment. The price increase is attributed to higher demand for local sugar resulting from low sugar stocks in anticipation of sugar shortage. For more details, refer to Table I. b) Wholesale Sugar Prices Wholesale sugar prices started the year 2016 at a monthly average of Kshs. 4,529 per 50kg, and took a decreasing trend to reach a minimum of Kshs. 4,145 in March. Subsequently, the prices posted some gains to reach a high of Kshs. 4,921 per 50kg bag in May. The high price level was short lived, leading to a price decrease in June 2016. However, in July 2016, the prices embarked on a steady upward trend to end September at a record high monthly average of kshs 5,762 per 50kg bag, this being the highest level attained in the last four years. In September 2016, both local and imported sugar traded at a price range of Kshs. 5,500 to Ksh. 6,200 per 50kg bag. The average price for imported sugar was Ksh. 5,716 per 50Kg bag compared to Kshs 5,762 per bag of local sugar, thus the local sugar was more expensive by Kshs. 46 per bag. It is also good to note that this month s price is 41% higher than to a mean price of Kshs. 4,094 per bag witnessed in September 2015. The increase is in tandem with the rising ex-factory and imports sugar prices. Olkalau town recorded the highest average wholesale sugar price of Kshs 6,200 while the lowest price was observed in Kitui town at Kshs. 5,525 per 50kg bag. Overall, during the period January - September 2016, wholesale sugar prices traded in the range between Ksh. 3,900 and Kshs. 6,200 with a mean price of Kshs. 4,729 compared to a range of Kshs. 3,550 to kshs. 4,800 and a mean price of Kshs. 4,032 per 50kg bag observed in the same period 2015. It is therefore observed that prices are higher in this year by 17%. Sugar Market Newsletter
In September 2016, Wholesale stocking prices for local sugar ranged between Kshs. 5,000 and Kshs. 5,900 with a mean price of Kshs. 5,585 per 50kg bag. Meanwhile, imported sugar was stocked at a narrow price range of Kshs. 5,200 to Ksh. 5,800 per 50kg bag, giving an average of Ksh 5,522. It is therefore observed that local sugar stocking price is more expensive by kshs 63 per bag. Table 2 below gives a summary of sugar prices f or the month of September 2016. Types of sugar Table 2: Wholesale selling and stocking prices Wholesale Sugar Prices ( Kshs /50 kg bag) Wholesale Stocking Prices ( Kshs /50 kg bag) Range Mean Range Mean Local Sugar 5,500 6,200 5,762 5,000 5,900 5,585 Imported Sugar 5,500 6,200 5,716 5,200 5,800 5,522 Overall 5,500 6,200 5,762 5,000 5,900 5,586 For more details refer to Tables I, II, III and Figures I and II. c) Retail Sugar Prices Retail sugar prices took a similar trend to that of the wholesale. The prices opened the year 2016 at a monthly average of Kshs.112 per kg and took a downward trend to attain a low of Kshs. 105.55 per kg in March. Some price re-correction was observed in the subsequent months to reach a 1 st high Kshs 111 per kg in May 2016, relaxed a bit in June and then embarked on a definite upward trend to end September at a monthly average of kshs.128.65 per kg. During the month of September 2016, loose sugar traded in the range of Kshs. 115 to Kshs. 145 per kg, giving an average price of kshs.127 per kilo. On the other hand, branded sugar retailed in the range of Kshs 110 to Kshs. 150 and had a mean price of Kshs. 133/kg. It is evident that loose sugar is cheaper than branded sugar by kshs 6/kg, ascribed to costs involved in packaging the small units. Retail stocking prices for local sugar ranged between Kshs. 5,300 and Kshs. 6,200 with a mean price of Kshs. 5,701 per 50kg bag. Meanwhile, imported sugar was stocked an average of kshs. 5,725 per 50kg bag. Overall, in January - September 2016, retail sugar traded in the range between Kshs. 85 and Kshs. 155 giving a mean price of Kshs. 111.04 per kg compared to a range of Kshs 75 and
kshs.135 with an average price of Kshs. 103.73 per kg observed in the same period 2015. It is therefore observed that retail sugar prices are 7% higher in this year. For more details, refer to Tables I, IV, V, VI and Figures III, IV, V. prices during the month of September 2016. Table 3: Retail Stocking and Selling Price Type of Sugar Table 3 below gives a summary of the retail sugar Retail Sugar Selling Prices ( Kshs. / kg) Retail Stocking Prices for 50kg bag & 24kg bale in Kshs. Range Mean Range Mean Local loose 115-145 127 5,300 6,200 5,702 Branded 110-150 133 2,200 2,800 2,560 Overall 110-150 129 N/A N/A IV: FOREIGN TRADE a) Sugar Imports Total sugar imports in September 2016 were 40,212 tonnes compared with 23,390 tonnes imported in the same period last year, an increase of 72%. Sugar imports for the month comprised of 61% brown/mill and 39% of refined white sugar. It is good to note that table sugar imports in September 2016 were 24,374 tonnes compared to 7,609 tonnes realized in the same period last year, a significant increase of 220%, attributed to increasing demand due to low sugar stocks being held by our sugar factories. COMESA FTA countries supplied Kenya with 29,856 tonnes, while EAC, specifically from Uganda gave 5,467 tonnes. Meanwhile, Egypt, Malawi, Zambia, Zimbabwe and Uganda were the only suppliers for table sugar in September 2016. Kibos & Allied Sugar: Simply Sweet
Overall, total sugar imports in January September 2016 were 219,118 tonnes against 181,628 tonnes in the same period last year, a 21% increase. Tables 4(a) and (b) below gives the summary for sugar imports. For more details, refer to Table VII annexed herewith. Table 4 (a) Sugar Imports in January September 2016 and 2015 in tonnes SOURCE 2016 2015 COMESA FTA 133,050 79,953 COMESA NON-FTA - 1,644 E.A COMMUNITY* 19,682 26,524 NON - COMESA 66,387 73,507 TOTAL 219,118 181,628 *All originated from Uganda Table 4 (b) Sugar Imports September 2016 and 2015 SOURCE 2016 2015 COMESA FTA 29,856 10,220 COMESA NON-FTA 0 0 Mumias Sugar E.A COMMUNITY* 5,467 3,309 NON - COMESA 4,889 9,860 TOTAL 40,212 23,390 b) Sugar Exports Total sugar exported in September 2016 was 0.106 tonnes compared to 0.6 tonnes dealt in the same period last year. Overall, a total of 88 tonnes were exported in January September 2016 compared to 54 tonnes observed in the same period last year. EPZ was the main destination for the sugar exports followed by South Sudan. For more details, refer to Table VIII.
V: WORLD SUGAR MARKET a) The Market in September 2016 World values surged to fresh four-year highs in September. The ISA daily price started the month at 19.83 cents/lb and was as high as 23.30 cents/lb on September 28th, the highest daily quotation since mid-july 2012. At the very end of the month the spot price retreated to 22.56 cents/lb, resulting in a monthly average of 21.53 cents/lb, up 7.5% from the previous month. White sugar prices (the ISO White Sugar Price Index) also improved considerably from USD 533.75/tonne (24.21 cents/lb) at the beginning of the month to USD 612.40/tonne (27.78 cents/lb) at the end of September. In terms of monthly averages, September was up 5.9% or USD 31.96/tonne from the previous month (USD 570.76/tonne and USD 538.80/tonne, respectively). The nominal white sugar premium (the differential between the ISO White Sugar Price Index and the ISA daily price) showed a slight improvement in September, strengthening from USD 95.02/tonne to USD 96.11/tonne. It also remains significantly higher than a three-year average of USD 81.10/tonne. The strong tone of the market can be attributed to a slowdown in crushing in August- September and low yields in Brazil s Centre-South, talks about possible large-scale imports by India, as well as a boost of speculators bullish net-long position in ICE No11 contract alongside technical activity before the expiration of the October Contract in New York. b) Conditions and Prospects FO Licht s October update of the world sugar balance shows that the 2015/16 (October/September) deficit has risen by 0.5 mln tonnes to 10.7 mln tonnes (raw value) from last month's 10.2 mln tonnes, whereas the deficit in the ensuing 2016/17 season has been reduced to 7.2 mln tonnes from 8.8 mln tonnes previously. Commerzbank lifted by up to 4.0 cents/lb its forecast for prices of raw sugar futures, which it saw averaging 21.0 cents/lb in the October-to-December period, and holding that level in the first three months of 2017 too.
Kabras Sugar Mara Sugar Chemelil Gold Star Sugar Sony Sugar Muhoroni Sugar Butali Sugar Kwale Sugar Diamond Sugar 7
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