Sugar shipments from Thailand, the second-biggest exporter, will surge 22% to a record this year as output expands to an all-time high and Asian demand increases, according to the Office of the Cane and Sugar Board.
Workers load harvested sugar cane onto a truck near Khan Phram village in Saraburi. Sugar shipments from Thailand, the second-biggest exporter, will surge 22% to a record this year. (Bloomberg photo)
Exports will climb to 9 million tonnes this crop year, beating the 8.5 million tonnes estimated in December and last year's 7.4 million tonnes, said Somsak Suwattiga, secretary-general of the state-run board. Output of sugar from the cane harvest now in progress will be as much as 11.5 million tonnes, more than 11 million tonnes estimated in December, he said. Sugar output was 10.02 million tonnes in 2012/13, board figures show.
''Rising supplies may help to curb global prices that rallied from a 43-month low in January as drought in Brazil and the smallest crop in four years in India, the two biggest producers, trim a global surplus. While a plan by India to subsidise exports may take some sales from Thailand, it's not a major concern as Thai shippers have regular trade partners,'' said Mr Somsak.
Indonesia and China are the region's largest buyers, US Department of Agriculture data show.
''Growing demand from Asia will absorb rising supplies from Thailand,'' Mr Somsak said. ''Whatever we have left over from local consumption, we usually are able to sell it all, mostly to the sugar-deficit region in Asia.''
Raw sugar for May delivery rose 2.3% to close at 17.07 cents a pound on ICE Futures US on Feb 21. That day prices reached as much as 17.14 cents, the highest for a most- active contract since Dec. 2. The sweetener, which fell for a third year in 2013, bottomed out 14.7 cents on Jan 28.
Global demand is estimated to rise 2.2% to 173.7 million tonnes this season, driven by emerging-market consumption, according to Macquarie Group Ltd. China may boost imports to run refineries, helping to soak up a surplus thats estimated to be 4.4 million tons, Macquarie said in a report on Feb 18.
''We have been expecting Thailand to expand production because of the recent expansion in mill capacity, as well as greater cane area as farmers move out of rice,'' Kona Haque, a London-based analyst at Macquarie, said in an e-mail. ''Thailand is one of the few areas in the world where expansion will likely take place. So, overall we expect the global glut to narrow, despite the higher Thai output.''
Indian output may drop to the lowest in four years in the 12 months that started Oct 1 after rains cut yields, according to the median of 12 trader, producer and analyst estimates compiled by Bloomberg. The Indian government plans to subsidise as much as 4 million tonnes of raw exports over two years in a decision criticised by producers in Brazil and Australia.
''Thailand's key markets are Indonesia, China and Malaysia,'' said Mr Somsak. Imports by Indonesia, the world's biggest buyer, will increase 3.6% to 3.7 million tonnes in 2013-2014, according to the USDA. Shipments into China will be 2.8 million tonnes, while Malaysia takes 1.9 million tonnes, USDA data show.
''Thai cane production will rise for a fifth year this season to 115 million tonnes as low temperatures and adequate water supply improve yields, while some rice and cassava growers shift to the crop for better returns,'' Mr Somsak said.
One tonne of cane yields an average 104.39 kilogrammes of sugar this season, from 93.79 kilogrammes last season, data from the office show.
Cane and sugar production will continue to increase as the government encourages rice farmers to switch, said Mr Somsak, without providing estimates.