Rainfall in the South African cane catchment areas has been well below the long-term mean and this topic has received substantial coverage over the past few months.
Given the lower rainfall during the season, it is projected that sugar production, by the Tongaat Hulett South African sugar operations will be below that of the 2013/14 year of 634 000 tons, which was a very good sugar production year. The latest estimate shows a drop in sugar production ranging between 5 and 17 compared to last year's sugar production. Tongaat Hulett's 4 South African sugar mills will commence the annual off-crop shut down at the end of the normal milling season.
The poor rainfall season, has been mitigated by an additional 11 554 hectares of newly planted cane which has been harvested for the first time this year. While there is a drop in sugar production this is still well above the two seasons prior to 2013/14 when sugar production levels were 486 000 tons.
The rainy season has commenced and good summer rains, accompanied by normal sunshine levels will contribute to yields returning to normal levels for the 2015/16 season. The business will benefit from a further 4 738 hectares of newly planted cane which will be harvested for the first time.
The South African Sugar industry's 2014/15 season estimate (in August 2014) of total sugar production is 2,222 million tons compared to 2,344 million tons in the 2013/14 season, a 5 drop off in production. Further updates will be made by the industry in due course. The drop in production will result in reduced exposure of the industry to the World market.
Measures to protect the local market against unfair import competition remain important and the overall increase in the reference price used in the import duty calculation over the last 6 months has been beneficial.
The focus in Tongaat Hulett on achieving substantial cost reductions has continued.
