Thailand’s sugar output is set to be even lower than expected this season after dry weather stunted growth, which will squeeze global supply and could extend a rally in benchmark futures.
Industry group Thai Sugar Millers Corp has trimmed the top end of its forecast production range by 500,000 tonnes to 7.5 million tonnes for 2023-24, according to Director Rangsit Hiangrat. Should output meet that estimate, it would be a third lower than what was produced in the previous season.
"Rainfall was absent in the critical period where cane needed water to grow," Mr Rangsit said in an interview, citing climate change. "It came later but the plants were already stunted, so that didn't help much."
Raw sugar futures last month capped the biggest monthly gain since April on a tighter supply outlook, and smaller output from Thailand will strain the market further. Millers in the world's third-biggest producer are seeing the lowest yield from crushed cane in at least 13 years, according to government data.
Thai millers have produced 4.9 million tonnes of the sweetener from about 49.57 million tonnes of cane crushed since the season started on Dec 10, according to the Office of the Cane and Sugar Board. That amounts to a sugar recovery rate of about 9.9% as of Feb 1, down from 11.8% last season.
Over the 12 years to 2022-23, Thailand was able to produce more than 100 kilogrammes of sugar per one tonne of cane, equivalent to a recovery rate above 10%, data from the sugar board shows.
Thai millers are expected to wrap up crushing this month or March, compared with early April last season, Mr Rangsit said.
The industry group's output forecast is 7 million to 7.5 million tonnes for 2023-24, compared with a November estimate of 7 million to 8 million tonnes, and down from a September projection of 9 million tonnes.