Author Topic: Thai Sugar Output May Reach Record as Price Jumps, Millers Say  (Read 771 times)

Offline Johnnie F.

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Thai Sugar Output May Reach Record as Price Jumps, Millers Say

March 8 (Bloomberg) -- Thailand may harvest a record sugar crop next year after farmers boosted planting, enabling them to benefit from global prices set to advance to an all-time high, according to the Thai Sugar Millers Corp.

Output from the world’s second-largest exporter may total 7.8 million metric tons in the year from November, said Vibul Panitvong, executive chairman of the company that groups Thailand’s 46 millers. Raw-sugar prices may reach 40 cents next year on low global inventories and strong demand, Vibul said.

A surge in prices would benefit exporters including Brazil, the largest shipper, while boosting costs for buyers such as India, the world’s second most-populous nation. The South Asian country will probably import about 4 million tons next year after purchasing as much as 7 million tons this year, Vibul said.

Thailand’s “cane production is likely to reach a record” next year, beating the 74 million tons recorded in the 2002-2003 crop year, Vibul said in an interview. Each ton may yield 105 kilograms of sugar, he said late on March 5.

Raw sugar had its biggest gain since 1974 last year as bad weather pared harvests in Brazil and India, the largest growers, producing a global deficit. The price touched 30.4 cents a pound on Feb. 1, the highest since January 1981. Speculation Brazil’s output may rebound cut the price to 22.19 cents on March 5.

Prices to Rebound

“Prices may rise to 27 cents a pound around July as India will probably seek sugar imports after local supplies subside,” said Vibul. Strong import demand, low global stockpiles and an inflow of speculative investment may drive the price to a record next year, Vibul said in Baan Rai district, Uthai Thani province.

World sugar production is forecast to trail demand by 9.4 million tons in 2009-2010 compared with a previous estimate of 7.3 million tons, the London-based International Sugar Organization said in an e-mailed report on Feb. 18.

The output forecast from the Thai Sugar Millers Corp. is similar to a prediction from Thai Roong Ruang Sugar Group, the nation’s second-largest miller. Cane output next year may total 73 million tons, yielding 7.5 million tons of raw sugar, Thai Roong’s Executive Director Nutthapol Asadathorn said on March 5.

Cane output this year may be about 68 million tons, below a 72 million ton target as warmer-than-expected weather reduces production and yield, said Vibul. Sugar production this year may total 6.8 million tons, he said.

El Nino Warning

To be sure, Vibul said output and yield forecasts for next year may not be met if El Nino persists. The weather pattern, caused by a warming of the equatorial Pacific Ocean, can parch parts of Asia, hurting agricultural production. “Production may fall 20 percent below the target,” Vibul said.

Thailand’s Office of Agricultural Economics said on Jan. 13 that dry weather caused by an El Nino weather pattern will probably cut production of rice, rubber and sugar. The nation is the world’s largest rice exporter.

The Office of the Cane and Sugar Board, the Thai industry regulator, forecast on Feb. 19 that output in the season that started Nov. 1 may decline to 6.7 million to 6.9 million tons from 7.2 million tons in the previous crop. Warmer-than-expected weather may cut the cane harvest to 69 million tons, it said.

Thai sugar accounts for about 14.9 percent of global exports, according to Bloomberg data. Canes, which take about a year to mature, are usually planted in the country around October and May.