Opinions Focus
- New crop Indian molasses should keep the market well-supplied.
- The tanker market remains volatile, but the worst might be behind us.
- EU beet molasses remain at high prices following Russia’s withdrawal from the market.
Cane and beet molasses markets have faced an uncharacteristically volatile time in 2022, not unlike the majority of other commodities. As every market has had to adjust to rising costs, higher energy costs, disruption to trade lanes, volatile FX movements and molasses has not been immune. It does appear we could be heading towards a period of stability in the molasses market.
Underpinning the stability is the supply of molasses to the market. The supply of Indian cane molasses to the export market has remained consistent in recent months and the new crop is due to commence shortly we should continue to see good supply in the market. The main issue is the continuing volatility in the tanker freight market but Charterers remain hopeful we could have now witnessed the peak in tanker freight rates.
Stability in the beet market is relative, we have witnessed a huge step up in pricing levels after the Russian invasion of Ukraine and have since settled at this higher level, with new-crop EU beet molasses priced at these levels. This has provided some stability in the market which had the potential to face even more inflationary pressure due to the continued absence of significant Russian beet molasses in the market. The supply and demand has rebalanced as demand from the feed sector fell, displaced by cheaper cane molasses or other feed commodities.
The broader macroeconomic factors are affecting all markets, and as noted, molasses is not immune from the effects.
Looking ahead to the next few months the molasses markets should benefit from consistent supply and some more price stability. The main factors to watch (other than the general macroeconomic situations) will be how the Indian cane crop progresses, the final balances of beet molasses production in Europe and tanker freight market price movements.
