In our update two weeks ago we said it had been a quiet few weeks in the molasses market, this has continued to be the case.
Around a month ago it did appear there were a lot of changes and news that could affect the molasses market and pricing; the lifting of the Maharashtra molasses export ban, better forecasts for Indian production, hope that Thai production could recover and potential recovery in demand if prices eased.
In the end it appears that the changes were not really enough to move the needle on prices. The lifting of the Maharashtra molasses export ban has not resulted in a glut of extra molasses onto the export market, with the opportunity likely delayed until new crop in December/January. Thai crop forecasts have continued to disappoint, with a very real concern that molasses exports will be limited from the new crop.
With the lack of improvement in supply and consequently pricing, demand has returned as a concern. Asian fermentation demand for molasses, from the potable alcohol sector, MSG and lysine sectors looks particularly poor. It appears the customer base for molasses has decided that current molasses prices are not competitive enough and have decided to minimise molasses buying where possible. This will result in limited molasses imports into the important Philippines market over the next few months. This is being replicated by other fermentation customers across the region.
In this context it appears we are set for a quiet period in the market, possibly the calm before the storm until the market is able to access the new-crop cane molasses later this year. We will be monitoring sugar crop forecasts closely over the next few weeks and months looking for any sign that molasses supply is likely to improve.
