Drought cuts Thai sugar output to 9-year low
Reduced supplies expected to keep global sugar prices near 30-month highs
published : 1 Feb 2020 at 15:26
PUNE, India: Sugar production in Thailand is expected to fall 28% to a nine-year low of 10.5 million tonnes in the current crop season as drought curtails cane supplies, according to Rangsit Hiangrat, director-general of Thai Sugar Millers Corp.
The reduced production for 2019-20 will limit shipments from the world’s second-biggest sugar exporter and support global prices which are trading near their highest level in 30 months.
The country could export between 6 million and 7 million tonnes of sugar in the current year, down from 11 million a year ago, Mr Rangsit told Reuters.
“Drought has badly affected cane plantations. It will have a negative impact on production this year and next year,” he said.
Sugar production in the next marketing year starting in October 2020 could fall below 10 million tonnes, he added.
The dry season started in November and usually lasts through April, although this year authorities say it could persist into June. A drought has been declared in 14 provinces in the central, northern and northeastern regions.
With reservoir levels low, the government has also asked farmers in some provinces near the Chao Phraya River basin not to grow off-season rice.
Sugar mills usually crush cane until early May, but this year they could stop crushing in early March due to limited supplies of cane, Mr Rangsit said.
Like Thailand, India’s sugar production could fall nearly 18% in 2019-20 as a drought followed by floods is expected to curtail output in the country’s second-biggest producing state, a trade body said on Friday.
Raw sugar futures prices are expected to rise a further 3% by the end of the year, boosted by a tightening in supplies, a Reuters poll of 12 traders and analysts showed on Friday.