Sugar looks up
THE sugar price is nothing to write home about at the moment but the region’s cane growers may be in for a cash harvest if price estimates for the next half decade turn out to be accurate.
The current spot price for a tonne of sugar is $420, but future swaps out to 2018-19 are pricing $480.
For astute growers who take advantage of locking in future prices, even 2016’s estimate of $468 is looking good.
The sugar price has fallen recently but according to Rabobank’s Queensland regional manager Chris Adams ‘‘the fundamentals are still there’’.
The big sugar terminal fire in Brazil last month has not had much impact on prices, more than offset by the supply expected from India and Thailand.
Rabobank is predicting a fourth consecutive year of surplus, with global raw stocks reaching oversupply of 5.4 million tonnes.
‘‘the market can handle that because we’re finding new markets all the time,’’ Mr Adams said. ‘‘But if it builds up more than that, it could be a problem.’’
The global stock to consumption level ratio is expected to reach 44 per cent in September 2014, which is 4 per cent above the 10-year average.
He said the forecast depreciation of the Australian dollar against the greenback – which is rising as America’s economy improves – is a fillip for growers.
At current prices the growers can make money, he said. ‘‘It’s a resonable price.’’
Despite falling prices recently, ‘‘the market hasn’t panicked at all, it can see what’s ahead of it.’’
Meanwhile, the Australian sugar industry is in overdrive to convey the message that sugar must not be excluded in the current round of key world trade talks.
Peak group Canegrowers says if sugar is left out of trade negotiations this time it could be decades before the Australian industry gets another chance at real reform.
Canegrowers says sugar has been the sacrificial lamb in some trade agreements in recent years, most notably in the US trade agreement when sugar was dumped at the last minute because ‘‘big sugar’’, which carries enormous political sway in the US, pressured the US government to continue its antiquated protectionist policy and quash any improved access for Australian sugar.
It is a decision that has plagued trade talks ever since.
‘‘That kind of protectionist behaviour is outmoded and should be a thing of the past for any country which believes itself to have a fair and ethical trade platform,’’ said Paul Schembri, chairman of Canegrowers.
‘‘The whole idea of trade reform is to remove trade restrictions and level the playing field. This is important to Australian growers to remain competitive on the global market, being amongst the few farmers worldwide that are not propped up by subsidies.
‘‘Removing barriers to markets will make Australian sugar more attractive to importers and create more opportunity for our exports.
‘‘Our growers can’t compete at all sugar’s left out.
‘‘ With 80 per cent of our product exported, Australian canegrowers must have improved market access opportunities. This will lift income and create job opportunities in regional Australia."
Australian sugar is using every avenue open to it to underscore how important sugar’s inclusion is, as the Trans Pacific Partnership (TTP), the long-running trade negotiations between 12 Pacific Rim countries, approaches finalisation.