Sugar output down as global prices rise
The recent drought has cut sugar cane production in Thailand, the world's second largest sugar exporter, raising concerns about falling sugar output at a time when global sugar prices are on a rising trend, according to the Thai Sugar Millers Corporation Ltd (TSMC).
Chairman Sirivuth Siamphakdee said the TSMC had set a preliminary forecast for the current 2016/17 sugar cane crop at 91.1 million tonnes, down by 3 million tonnes from the previous 2015/16 crop.
"We expect to see a drop in sugar-cane production this year as the drought had hit output. However, we hope that cooperation among sugar millers and sugar cane farmers to improve productivity and milling efficiency will help increase yield. That will help make up for the fall in sugar production," said Mr Sirivuth.
The TSMC's forecast for falling sugar-cane production is in line with that of the Office of the Cane and Sugar Board, which oversees the country's sugar industry.
Mr Sirivuth said the recent drought had hit sugar-cane production since early this year. However, the TSMC and industry officials said they hope that heavy rain in some sugar cane producing areas would help boost production and offset the decline in output.
In addition, the sugar-cane yield is another concern as industry officials said the drought could also cut the sweetness of the sugar cane, causing sugar production to be much lower than expected, he added.
The TSMC plans to hold a workshop on Nov 7-8 to update the situation and seek methods to help increase productivity during the crushing period.
Thailand's sugar-crushing season normally runs from November to April.
In the previous 2015/16 crop, Thailand produced 9.7 million tonnes of sugar from 94 million tonnes of sugar cane.
With concerns about falling production caused by the drought, most farmers had to leave sugar cane in the ground longer than expected, leading to a delay in the start of the harvesting and crushing period.
"This year, the start of the 2016/17 crop is set for Dec 1," said Mr Sirivuth.
Traders and industry officials said falling production at a time of rebounding global oil prices would prevent Thailand from capitalising on rising income from sugar exports next year.
Global sugar prices dropped substantially over the past few years from a record high of 36 US cents per pound in 2012 to as low as 11 cents late last year as a glut and weak global economy cut demand.
The price of raw sugar futures rose to 23.20 cents per lb, up by more than 30% from around 15 cents in 2015.
Rising global sugar prices are also expected to spur smuggling at a time when Thai sugar production has been reduced by unfavourable weather, cutting supply for the domestic market.