About Czarnikow

About Czarnikow
…The Premier Provider of Sugar Market
Services…
Czarnikow has been in the sugar
business since 1861
Czarnikow is the leading
professional services company in
the sugar market
Czarnikow has a ‘first hand’
presence in all major sugar
markets of the world and employs
over 100 professional staff
A Global Office Network
Head Office
London
Moscow
New York
Dubai
Mexico
Nairobi
Hong Kong
Singapore
Rio
Historical Price Spikes
60
c per lb
55
New York Spot Prices
50
45
Oil
Price
Shock
40
Oil
Price
Shock
35
The New
Environment
30
Cuban Missile
Crisis
25
Last Post-Boom
Trough
Suez
Crisis
20
15
Old Range
Korean
War
10
5
0
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04
World Production and Trade
Cross-border trade
≈ 40m tonnes
Consumption ≈ 140m tonnes
Domestic Use
Raws
Whites
Preferential
World Trade
No.11 Sugar Price
Cents per lb
11.00
10.00
March 2003 contract price
spike.
9.00
India swings from
exporter to importer
8.00
7.00
6.00
Jun 05
Apr 05
May 05
Mar 05
Jan 05
Feb 05
Dec 04
Oct 04
Nov 04
Sep 04
Jul 04
Aug 04
Jun 04
Apr 04
May 04
Mar 04
Jan 04
Feb 04
Dec 03
Oct 03
Nov 03
Sep 03
Jul 03
Aug 03
Jun 03
Apr 03
May 03
Mar 03
Jan 03
Feb 03
Dec 02
Oct 02
Nov 02
5.00
Recent 6 month 8.00c /
9.50c price range
Speculators vs. No.11 Sugar Price
c per lb
11.00
lots
140,000
Speculative Open Interest
120,000
1st Delivery New York No.11
10.00
100,000
80,000
9.00
60,000
40,000
8.00
20,000
7.00
0
-20,000
6.00
Jun 05
Apr 05
May 05
Mar 05
Jan 05
Feb 05
Dec 04
Oct 04
Nov 04
Sep 04
Jul 04
Aug 04
Jun 04
Apr 04
May 04
Mar 04
Jan 04
Feb 04
Dec 03
Oct 03
Nov 03
Sep 03
Jul 03
Aug 03
Jun 03
Apr 03
May 03
Mar 03
Jan 03
Feb 03
Dec 02
Oct 02
-60,000
Nov 02
-40,000
5.00
Freight Rates vs. No.11 Sugar Price
US$ per day
50,000
Trans Pacific round voyage (Route 2)
Cents per lb
11.00
Monthly Average No.11 First Futures
Cost and Freight price
10.00
40,000
9.00
30,000
8.00
20,000
7.00
10,000
6.00
5.00
Jun 05
May 05
Apr 05
Mar 05
Jan 05
Feb 05
Dec 04
Oct 04
Nov 04
Sep 04
Jul 04
Aug 04
Jun 04
Apr 04
Mar 04
May 04
Feb 04
Jan 04
Dec 03
Nov 03
Oct 03
Sep 03
Aug 03
Jul 03
Jun 03
May 03
Apr 03
Mar 03
Feb 03
Jan 03
Dec 02
Oct 02
Nov 02
0
Speculators vs. No.11 Sugar Price
c per lb
11.00
lots
140,000
Speculative Open Interest
120,000
1st Delivery New York No.11
10.00
100,000
80,000
9.00
60,000
40,000
8.00
20,000
7.00
0
-20,000
6.00
July 2004 Outlook
1st Q'04
2nd Q'04
3rd Q'04
4th Q'04
1st Q'05
2nd Q'05
3rd Q'05
1750
1500
White
1250
1000
750
500
250
0
-250
-500
-750
-1000
-1250
-1500
Raw
Jun 05
Apr 05
Trade Flows- Raw & White Sugar
May 05
Mar 05
Jan 05
Feb 05
Dec 04
Oct 04
Nov 04
Sep 04
Jul 04
Aug 04
Jun 04
Apr 04
May 04
Mar 04
Jan 04
Feb 04
Dec 03
Oct 03
Nov 03
Sep 03
Jul 03
Aug 03
Jun 03
Apr 03
May 03
Mar 03
Jan 03
Feb 03
Dec 02
Oct 02
-60,000
Nov 02
-40,000
5.00
Trade Flows- Raw & White Sugar
June 2005 Outlook
1st Q'05
2nd Q'05
3rd Q'05
4th Q'05
1st Q'06
2nd Q'06
3rd Q'06
1750
1500
White
Raw
1250
1000
750
500
250
0
-250
-500
-750
-1000
-1250
-1500
Trade Flows- Raw & White Sugar
June 2005 Outlook
2nd Q'05
White
Raw
3rd Q'05
Small raw sugar deficit despite
large Brazilian export
programme (3.8m tonnes
during Q3)
Trade Flows- Raw & White Sugar
June 2005 Outlook
4th Q'05
1st Q'06
2nd Q'06
White
3rd Q'06
Raw
Market back to 1m tonne trade
surplus during 2005/06
Trade Flows- Raw & White Sugar
June 2005 Outlook
2nd Q'06
White
A potential raw sugar deficit
during the 2nd quarter could
make the Trade interested in
the March 2006 futures contract
Raw
Trade Flows- Raw & White Sugar
June 2005 Outlook
1st Q'05
2nd Q'05
3rd Q'05
4th Q'05
1st Q'06
2nd Q'06
3rd Q'06
1750
1500
White
Raw
1250
1000
750
500
250
0
-250
-500
-750
-1000
-1250
-1500
World Stock Change
US c/lb
18
16
Million tonnes
No.11 Raw Spot Price
Stock Change
10
8
6
14
4
12
2
10
0
8
-2
6
4
-4
Early indications are that the
statistics will be in balance
during 2005/06
-6
-8
2
| 82 | 83 | 84 | 85 | 86 | 87 | 88 | 89 | 90 | 91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 03 | 04 | 05
India
Indian Swing Cycle
Million Tonnes
4.0
Production/Consumption Difference
Consumption
2.0
0.0
-2.0
-4.0
-6.0
Marginally higher production
has reduced need for white
sugar imports
-8.0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indian Imports 2005
Raw Sugar Imports: 1.7m tonnes
White Sugar Imports: now unlikely
Indian Imports 2006 ?
Raw Sugar Imports: 1.0 m tonnes
Small White Sugar Exports (ALS)
China
Chinese Consumption
14
12
New government regulations support
Consumption growth.
10
000's
tonnes
8
6
4
2
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
China Production Progress
(cane & beet)
12,000
04/05
02/03
03/04
10,000
'000 mt
8,000
6,000
4,000
2,000
0
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
China Factory Sales
1,400
2004/05
2003/04
1,200
'000 mt
1,000
800
600
400
200
0
Nov
Dec
Jan
Feb
Mar
Apr
The EU Sugar Regime:
2m
Preferential
Imports
a rough balance
5m
Exports
=
20 m
Production
17m
Consumption
Original Quota Cuts & Price
Euros per tonne
700
million tonnes
20.0
Proposed Quota Cut
Proposed Price Cut
18.0
600
16.0
500
14.0
12.0
400
10.0
300
8.0
6.0
200
4.0
100
2.0
0`
0.0
04/05
05/06
06/07
07/08
08/09
Revised Production Cuts & Price
Euros per tonne
700
million tonnes
20.0
Possible production
Proposed Price Path
Reference Price net of
restructuring Amount
18.0
16.0
600
500
14.0
12.0
400
€730 buy out price
10.0
€625 buy out price
8.0
300
€520 buy out price
6.0
4.0
200
€420 buy out price
2.4m tonne fall?
100
1.7m tonne fall?
2.0
1.0m tonne fall?
0`
0.0
04/05
05/06
06/07
07/08
09/10
08/09
EU Exports
mtwv
7.0
6.0
5.0
Strong possibility of record exports in
final year
4.0
3.0
WTO limit circa 1.3m tonnes
2.0
1.0
0.0
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
Main homes for EU Sugar
Other Europe
Imports circa
650k
tonnes
Middle East
Imports circa 1.16m
tonnes
West Africa
Imports circa 360k
tonnes
North Africa
Imports circa 755k
tonnes
Futures EU Exports?
Switzerland, Norway and Israel import
roughly 1m tonnes of sugar from the EU
Far East
Imports circa 1.75m
tonnes
Brazil
Brazil Trade Balance
45
40
35
US$ Bln
30
25
20
15
10
5
0
(5)
(10)
1995 1996
1997 1998
1999
2000 2001
2002 2003
2004 2005
Real Chart
Real/US$
3.30
3.20
3.10
3.00
2.90
2.80
2.70
2.60
2.50
2.40
19/05/2005
05/05/2005
21/04/2005
07/04/2005
24/03/2005
10/03/2005
10/02/2005
24/02/2005
27/01/2005
13/01/2005
30/12/2004
16/12/2004
02/12/2004
18/11/2004
04/11/2004
21/10/2004
07/10/2004
23/09/2004
09/09/2004
26/08/2004
12/08/2004
29/07/2004
15/07/2004
01/07/2004
17/06/2004
03/06/2004
20/05/2004
2.30
CS Region Sugar Production Cost
Centre-South Region
Own cane
US$1.00= R$2.93
(US c/p Sep/2003)
0.50
5.77
0.77
1.18
0.38
0.48
0.14
Harvesting
Loading
4.49
3.32
0.36
0.76
0.11
0.62
0.47
Plantations
Investments
Land
Maint..
Adm.
Cost of
Capital
Transport Cane Cost
Ex-Mill
Tolling
Sugar Cost
Ex-Mill
Freight
to Port
Port
Operations
Sugar Cost
FOB
CS Region Sugar Production Cost
Centre-South Region
Own cane
US$1.00= R$2.93
6.71
0.50
Current Values
1.08
1.21
0.51
0.46
0.13
Harvesting
Loading
5.13
3.91
0.39
0.90
0.10
0.77
0.65
Plantations
Investments
Land
Maint..
Adm.
Cost of
Capital
Transport Cane Cost
Ex-Mill
Tolling
Sugar Cost
Ex-Mill
Freight
to Port
Port
Operations
Sugar Cost
FOB
CS Region Sugar Production Cost
0.50
Centre-South Region
Own cane
US$1.00= R$2.40
8.08
1.32
1.48
Current Values
0.62
0.57
0.15
Harvesting
Loading
6.26
4.78
0.47
1.10
0.12
0.94
0.80
Plantations
Investments
Land
Maint..
Adm.
Cost of
Capital
Transport Cane Cost
Ex-Mill
Tolling
Sugar Cost
Ex-Mill
Freight
to Port
Port
Operations
Sugar Cost
FOB
Brazil Cane Splits
Sugar Domestic
Anhydrous Alcohol
Sugar Exports
Hydrous Alcohol
Ethanol and Flex-Fuel Sales
200,000
500,000
180,000
Flexfuel
Pure Ethanol
Gasoline
12 Month Flex-Fuel
450,000
Apr-05
Jan-05
-
Jul-04
-
units
50,000
Oct-04
20,000
Apr-04
100,000
Jan-04
40,000
Jul-03
150,000
Oct-03
60,000
Apr-03
200,000
Jan-03
80,000
Oct-02
250,000
Jul-02
100,000
Apr-02
300,000
Jan-02
350,000
120,000
Oct-01
140,000
Jul-01
400,000
Jan-01
160,000
Apr-01
units
Total Market Sales Trend
-
U.S.
South Africa
U.K.
Venezuela
Spain
Ghana
Caribean
800,000
Will rise to 1.2bln / year from 2006
600,000
500,000
400,000
300,000
200,000
100,000
Dominican Rep.
South Africa
U.K.
Venezuela
Spain
Ghana
Caribean
Italy
Finland
El Salvador
Belgium
Singapore
Sweden
Argentina
Turkey
Mexico
China
Canada
Costa Rica
Korea
Nigeria
Jamaica
Japan
Netherlands
Tunisia
Norway
Chile
Tunisia
Norway
Chile
West Indies
Expected Ethanol Exports 2005/06
West Indies
Dominican Rep.
Czarnikow Biofuels indicative estimate
Italy
Finland
El Salvador
Belgium
Singapore
Sweden
Argentina
Turkey
Mexico
China
Canada
Costa Rica
Korea
Nigeria
Jamaica
700,000
Japan
Netherlands
India
U.S.
-
India
m3
m3
Brazilian Ethanol Exports 2004/05
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
Brazilian Cane Production and Sugar
Exports Projection
500
450
25
Projections
Cane
Sugar Exports
20
350
300
15
250
200
10
150
100
5
50
Candidates for Change?
Americas
Europe, North
Africa & Middle
East
Asia-Pacific
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
-
-
mln tonnes
mln tonnes
400
Historical Price Spikes
60
c per lb
55
New York Spot Prices
50
45
Oil
Price
Shock
40
Oil
Price
Shock
35
The New
Environment
30
Cuban Missile
Crisis
25
Last Post-Boom
Trough
Suez
Crisis
20
15
Old Range
Korean
War
10
5
0
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04