Sugar cane output comes under threat
After a severe dry spell, sugar producers are concerned about the prospects for exports.
Thailand, the world’s biggest sugar exporter, is likely to have smaller sugarcane crops to be sold on the world market, according to producers and a senior government official.
The Office of the Cane and Sugar Board has forecast sugar cane output of around 111 million tonnes in the 2015-16 crop from the crushing season that runs from November to next April.
According to initial estimates, the board expects Thailand to produce around 11 million tonne of sugar from the sugar cane.
“The dry spell has lasted longer than expected and has already damaged newly grown sugar cane in major growing areas in northeastern, western and central areas,” said Siriwut Siempakdi, president of the Thai Sugar Millers Corporation (TSMC) public relations working group.
He said sugar cane in the worst-hit areas of the Northeast had already been destroyed by the drought, while some crops in other areas would not give good yields.
“If the dry spell lasts beyond July, it will cause a severe impact on the country’s sugar business because the drought will not only cut sugar cane output but will also cut yields from the cane,” said Mr Siriwut.
He said the longer-than-expected drought was expected to cut sugar content in the cane, meaning the country would produce less sugar despite abundant sugar cane.
Mr Siriwut said the TSMC planned to conduct a survey again before the start of the crushing season in November in order to see exactly how much exactly the sugar cane crop would be affected by the drought.
“We haven’t had any official forecast about how serious the problem could be. However, we expect to have 80-100 million tonnes of sugar cane at worst if the dry spell lasts longer,” he said.
That would be equivalent to 8-10 million tonnes of sugar for domestic consumption and export in 2016.
Thailand normally sets aside 2.4-2.5 million tonnes of sugar for domestic consumption and the rest for export, mostly to traditional customers in Asia such as Japan, Indonesia, Taiwan, South Korea and China.
Thailand exported 7.3 million tonnes of sugar in 2014, up from 6.5 million the previous year.
However, the possible drop in sugar production is unlikely to have a significant impact on global prices, which are moving in a range of 12-13 cents per pound, as surpluses from other major producers such as Brazil and India still weigh on prices.
The TSMC plans to visit Indonesia in August to seek cooperation and tighten trade relations with Thailand’s biggest sugar market. Indonesia bought 1.7 million tonnes of Thai sugar last year.