Sugar plummets by $ 300 per tonne since start of year

SUGAR prices have tumbled from a super high of about $ 700 a tonne six months ago to below $ 400 a tonne this week.

As sugar mills up and down Queensland’s sugar coast swung into action for the 2017 harvest last week, growers who did not, or could not, forward price early in the year when the market was on a high, were hoping for a sudden change for the better.

But, if there is change for the better, it might not be sudden. On the back of increased production estimates out of Brazil, rural lender Rabobank is predicting low prices to continue into this year’s third quarter.

Chairman of peak sugar industry body Canegrowers Paul Schembri said the $ 700 a tonne price six months ago was something growers only saw “once every 20 years”.

He said that to see it go back to $ 400 a tonne was a “massive slip”. He said that at that price it was back to the cost of production.

“What we are seeing now is the market outlook moving from balance to surplus. Six months ago the view was that sugar was a safe haven for investment, but now it is seen as not being so secure. If the price stays down at this level it will do economic damage,” Mr Schembri said.

Despite the gloom of the downward price trend, Mr Schembri said growers could take heart in the fact that world consumption was increasing at a rate of about 1.8 per cent per annum.

He said this was despite debate in Western nations about sugar and nutrition. “By 2050, 50 per cent of the world demand for sugar will come from Asia,” he said.

Ingham grower Steve Marbelli grows 35,000 tonnes of cane. Yesterday he put a positive spin on an otherwise depressing topic, saying the cold weather would drive up sugar content in the cane.

“These cold mornings will sweeten it up. The crop itself is not as good as last year, but the sugar content will be up,” Mr Marbelli said.

Due to a long- running dispute over sugar marketing arrangements, Mr Marbelli has only recently signed a Cane Supply Agreement with miller Wilmar.

He said he and other growers who had only recently signed CSAs have potentially lost “a couple of hundred dollars a tonne”. “It is what it is,” he said. In Rabobank’s current Rural Confidence Survey, North Queensland manager Trent McIndoe said confidence among cane farmers was at a low. He said this low level of confidence was offsetting a more buoyant outlook in the beef sector.

“While the beef sector continues to enjoy solid prices, confidence among cane producers has been weighed down by a softening global outlook and supply uncertainty,” he said. “Of the sugar producers surveyed this quarter, 27 per cent were expecting conditions to worsen this year, up from 16 per cent last quarter.”

Mr McIndoe said 63 per cent of North Queensland producers spoken to for the survey had a “negative outlook”. He said sugar producers made up the bulk of these respondents.