Insight Focus
- Ukraine war changes European import patterns
- High North American prices attract Central American imports
- Asian market focusing on regional supply
The international molasses market’s response to the current supply chain stress and higher transport and energy costs has been a return to the importance of regional markets.
In the last decade or more of relatively benign freight and energy costs the molasses market, in common with most other markets, has become more globalised. Transport between regions was easy with stable freight rates allowing for molasses to be moved to demand areas efficiently. A good example would be Central American cane molasses, in the mid 2010’s cane molasses from the region was exported to North America, the Caribbean, Asia and Europe.
The effect of the disruption on supply chains, energy and transport costs has been to increase the importance of regional markets.
Europe:
The main change is the effect of the Russia-Ukraine war which has disrupted beet molasses trade flows. Approximately 30% of beet molasses exports originated in Russia and important overland supply chains existed from Ukraine into Eastern Europe. The response has been for domestic customers of beet molasses to try and reduce their reliance on imported beet molasses and aim to localise supply if possible.
In terms of cane molasses, the reduced Central American cane molasses supply has been replaced by Indian and Pakistan cane molasses, benefitting from the consecutive years of large sugar crops in India.
Americas:
We have seen a steady decline in Central American cane molasses exports to Europe and in the last three years an absence of exports to Asia. A combination of good demand in North America and higher ethanol prices in recent times has increased the price to a level that has reduced exports to Europe.
Asia:
The market has rebalanced to focus on supply within the region and from Australia. Indonesian exports have been stable in recent years and Indian cane molasses has been available. The Australian crops have improved as mild La Nina conditions have ended the drought conditions that have affected recent crops. The exception is Thailand which had a number of poor sugar crops in recent years, however production did recover in the 2021/22 sugar crop.
