[Sugar Industry Analysis, April 21, 1972] Part: 1 of 16
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Apr. 21, 1972
SUG h w h U
Prospects for the Industry are improving. The price
structure Is stabilizing. Some profits improvement, albeit
rm'Il, seems likely over the next 12 months.
For the longer term the sugar companies are likely to
record better results both from their sugar activitiesand
from their Increasing diversification into related spe-
cialized areas, some quite removed from sugar refining.
Holly Sugar and Southdown are of interest to investors
s6eking superior market performance in the next 12
months. Amalgamated Sugar, Amstar and Sucrest offer
generous yields.
Insiders Iought on Balance Insiders Sold on BalanceAmalgamated Sugar
Dollar
Value
23,200 Amstar Corp.
Southdown, Inc.
Great Western UnitedNet transactions are for the period October 11, 197
through January 10, 1972.
Funds BCought cn r[glance Funds Sold on Balance
($thou- ($thou
sands) sand:Amstar Corp.
253 None
workers' strikes (which plagued operations in early
January) are a thing of the past, the domestic cane
refiners are getting back to more normal operations.
With demand for sugar continuing strong and with
prices likely to stabilize at close to present levels, reason-
ably good margins of profit should be obtained over the
next 12 months in marked contrast to the experience in
the December and March quarters.,
Prospects For The Beet Sugar Processors Are
Reasonably GoodBeet sugar production increased about 5% this year.
The average yield in terms of tonnage and sugar content
-was comparable but not up to that of the 1970tcrop.
Weather was a factor. Marketing appears to e
proceeding fairly well and the indication is that profit
margins of the beet sugar processors will be close to those
o btained last year. With sugar prices expected to stabil-
ize at close to present levels, profits of the beet sugar
processors are expected to show some improvement in
S the months ahead even though labor costs have increased
8 following the wage agreements reached last fall.
Because of the improved demand for sugar, a further
1 trimming of inventories probably can take place, adding
to profitability.Sugar Consumption Is Increasing
Sugar cannot be characterized as a growth industry.
Rapid expansion of consumption is not indicated but
there appears to be a fairly steady improvement in con-
sumption trends in line with population growth an
rising per capita income..u-
s)Net transactions reported during the December quarter.
The Price Structure is Stabilizing
Sugar is subject to wide price fluctuations. Substan-
tial purchasing of sugar in the world market by eastern
European countries in December caused world sugar
prices to increase and world sugar supplies to decline.
The higher raw prices will likely stimulate increased
production throughout the world; but for the time being.
at least, it looks as though world prices will stabilize at
close to their recent high levels.
On the domestic scene, raw sugar prices also have been
fluctuating, generally moving upwvardl. Because ot the
dock strikes which closed the ports intermittently during
the second half of 1971, supplies of raw cane sugar
gradually became depleted and prices climbed. efine
canetsugar pricestadvanced, too, but noteat the e
and they lagged the riin rws.A eut thepreadt
between raw and refined cane prices narrowed and profit
margins deteriorated rapidly.
A period of greater price stability at more favorable
spreads now appears to be at hand. The 1972 U.S. sugar
quota has been lifted in three stages to 11.9 million tons
to stem the spiraling increases in the price of rawsugar.
This action has resulted in a more stable market. hd
spread between raw and refined prices has been restored
to normal.
Prospects For the Cane Refiners Are Improving
Now that the longshoremen's strike (which disrupted
deliveries during the December quarter) and the refineryTo stimulate even greater use of sugar, new products
are being developed by both the cane and beet sugar
refiners, both for direct consumption and for use in the
convenience foods and specialties products industries.
More and more, the companies are providing specialized
sugars to industries users tailored to their requirements.
The sugar companies also are benefiting from di-
versification into related product lines such as cattle
feed, brewing and food service.vundertaken. outie
manufacture, cement production and land develop-
ment are some of the promising areas. It is evident that
the sugar companies are aware tha t eve an
improved rate of earningsdiesfcto growth and a better return on
capital limited pent diversifiction in addition to
sugar operations may be the answer. M.A. C.
RE LATIVE STRENGTH (Ratio of Industry to Value Line 1,400)
.50 ---Beet Sugar Processors-
Cane Sugar Ref iners- - -
1961 1966 1969 1910 1911 1912It
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[Sugar Industry Analysis, April 21, 1972], clipping, April 21, 1972; New York. (https://texashistory.unt.edu/ark:/67531/metapth1211620/m1/1/: accessed July 2, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting Rosenberg Library.