MSM Malaysia Holdings Berhad Annual Report 2020

MARKET LANDSCAPE UNITED STATES US’s sugar production is estimated to be around 9 million tonnes this season (5 million tonnes from Beet, and 4 million tonnes from Cane), an increase by about 1 million tonnes from last season. US is expected to import another 3.4 million tonnes with 1.16 million tonnes coming from Mexico to meet its 12.3 million tonnes consumption. BRAZIL Brazil is expected to produce about 38 million tonnes for the 2020/2021 season, an increase from 26.6 million tonnes last season, helped by good weather conditions in key planting areas. Sugar production in Brazil is heavily influenced by ethanol and crude oil prices as millers can choose to switch to Ethanol production from the same sugarcane. Ethanol is a substitute for Petrol in Brazil. INDIA India is expected to produce about 31.5 million tonnes for this season, an increase by about 5 million tonnes from last season. However, exports are targeted to high-premium paying countries such as Indonesia due to the lower-than-expected quantum of exports subsidies by its government last year. THAILAND Thailand’s cane crops are expected to recover in the 2021/2022 season provided that rainfall and plantings are consistent. Production has been severely affected by the prolonged dry weather and increased competition from Cassava which saw the production numbers drop by half from its normal annual production. With the current higher prices of sugar globally, farmers will be incentivised to plant more cane. MARKET OVERVIEW 2020 Global sugar production is expected to increase by 6.2 million tonnes for the 2020/2021 season from the 179.7 million tonnes produced last season. This is due to the increase in production in Brazil from 26.6 million tonnes last season to 38 million tonnes expected currently, offsetting the reduced production in Thailand, which has suffered dry-weather in key-planting areas. Thailand’s production is estimated to be around 7 million tonnes, down by 1.6 million tonnes from last season, and almost half of its normal annual sugar production of 14 million tonnes. Raw sugar prices (NY11) reached the peak of USD15.89 cents/lbs early part of the year and slumped to USD9.21 cents/lbs mirroring the drop in crude oil prices in April 2020. Raw sugar prices are expected to trade with an upward bias in 2021 as the correlation with the crude oil pricing remains strong, prompting millers in Brazil to produce more ethanol instead of sugar. This, in-turn is expected to reduce the availability of Brazilian sugar for the next season. 2020/2021 SUGAR OVERVIEW OVERVIEW COUNTRY MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 33 SUSTAINABILITY REPORT EFFECTIVE LEADERSHIP CORPORATE GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING