Since July, Kulea has reported a notable increase in Kenya’s brown sugar wholesale prices for the first time last week. In Nairobi, the price rose by USD 30 to USD 788 per metric ton, while in Mombasa, it increased by USD 15 to USD 758 per metric ton. This uptick contrasts with the previous seven weeks, during which prices consistently dropped due to ample sugar stocks in the local market. Meanwhile, in Djibouti, prices settled at USD 690 per metric ton, and low-quality white sugar (LQW) saw a 4.55% increase.
In Kenya, the landing costs for VHP sugar from all markets were higher than domestic prices, resulting in negative import parities. According to the Kulea Trade Tool, Somalia has an open market in Brazil for low-quality white sugar, with positive import parities.
In regional news, the South African sugar industry is pursuing a diversification strategy to enhance profitability and ensure long-term sustainability. The South African Sugar Association (SASA) has identified over ten product diversification opportunities, drawing inspiration from successful models in Brazil and India. This initiative aims to support the livelihoods of over one million people in rural KwaZulu-Natal and Mpumalanga and is part of the broader Sugar Value Chain Master Plan to 2030.
In Zimbabwe, Hippo Valley, the country's largest sugar producer, is facing financial challenges due to a mismatch between its income in Zimbabwe Gold (ZiG) and expenditures in US dollars. With revenues increasingly denominated in ZiG and a decline in USD sales, the company is struggling to meet supplier demands for payments in USD, putting financial pressure on its operations.
During the week, several vessels were en route to East African ports, with significant sugar shipments destined for Dar es Salaam and Somali ports. No vessels were expected in Kenyan ports, highlighting a reliance on local production for current sugar supply needs.
Overall, Kenya's local market experienced an increase in sugar prices after weeks of decline, while the rest of the East African Community (EAC) markets remained stable. This shift coincides with challenges for speculative traders due to high landing costs, which have reduced importation prospects. The lack of incoming vessels at Kenyan ports further underscores the role of local production in stabilizing the sugar supply chain.
Source: kulea.com
Summary by Victor Agut