Sugar industry projected to lose B10bn as baht rises

Sugar industry projected to lose B10bn as baht rises

The Office of the Cane and Sugar Board (OCSB) projects the sugar industry will lose 10 billion baht in the upcoming sugar-crushing season because of the baht's appreciation and the global oversupply.

The season usually starts in late November and ends in early May.

"Thai farmers and millers will suffer from these negative factors," said Warawan Chitaroon, the OCSB's secretary-general. "The baht's strength will cause 6 billion baht in losses for sugar exports this season."

Ms Warawan said the currency has gained two baht against the US dollar from the same period last year.

She said the global sugar price is flat because of a glut, causing the Thai sugar industry a 4-billion-baht loss.

"The global sugar supply is much larger than overall demand, mainly because India and China produced roughly 6 million tonnes of sugar cane," said Ms Warawan.

"The oversupply is projected to remain for a couple of years, pressuring the global price to stand at 11-12.5 cents per pound, compared with 13.5 cents last year.

She said as a result of these negative factors, the OCSB projects the initial sugar cane price at roughly 750-800 baht per tonne, with commercial cane sugar reaching level 10 in sweetness for the upcoming season.

Thailand's sugar cane output in the upcoming crushing season is projected at 119 million tonnes, down from 131 million last season. The board expects a widespread drought in the country will reduce plantation areas.

The reduced output will lower sugar exports next year.

"Earlier, the OCSB projected the worst-case scenario for sugar cane output at 106 million tonnes this season. Heavy rains improved planting conditions somewhat, increasing the projection," said Ms Warawan.

The OCSB expects Thailand's sugar mill production in 2019 to stand at 14.6 million tonnes. Of the total production, Thailand exports 12.0 million tonnes, while local sales stand at 2.6 million tonnes.

Thailand is the world's fourth largest sugar producer and second largest exporter.

The country has 57 sugar millers, 384,708 cane farmers and 11.5 million rai of plantation area.

She said the OCSB is encouraging sugar cane farmers to adopt new technology to increase the cane yield up to 15% from 11% because Thailand has difficulties in expanding plantation areas for sugar cane.

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