It has been a quiet few weeks in the molasses market. The market is waiting for the new-crop Northern Hemisphere sugar crops to arrive and a cane molasses supply increase. In the interim, the main factors that have persisted so far in 2020 have remained constant; namely a tight physical supply, robust prices and concerns about demand.
Prior to the new crops, the supply has remained tight and the majority of cane molasses from Central America has now been shipped with only small balances left. In terms of India, all eyes are on the new crop, with only limited quantities available in the short term. Australia is not forecast to have any surpluses for export outside of their traditional New Zealand and US destinations.
In the short-term, there is little to indicate a softening of prices, which is reinforcing concerns about demand for cane molasses. In searching for better news, the market is turning its focus towards new-crop sugar production, which is a mixed bag in terms of news.
As noted on Czapp recently, the new Indian cane crop looks set for an increase compared to last year and the monsoon rains have been good so far. Production could end up close to the 2018/19 level.
The Thai crop looks like it will disappoint again, with few signs of recovery in production. Therefore, we are likely to see competing tensions in the Asian market; how far can India make up for the second poor crop in a row in Thailand? It is still probably too early in the year to make any firm forecasts, but the tightness in supply could persist for slightly longer than initially hoped.
In the beet molasses market, there has been a consistent pricing in the last two months of beet molasses from the new crop, with sugar producers across the EU pricing the majority of domestic and export quantities. Prices look fairly uniform across the region, at higher levels than the last two years. The market has taken some time to recover from the expansion of sugar production after the removal of sugar quotas in 2017, which resulted in lower prices for sugar, molasses and ethanol.
