Thai Sugar Output May Reach Record as Yields Climb, Board Says

Sugar production from Thailand, the world’s second-largest shipper, may jump to a record this year as wetter-than-average weather improves yields, potentially raising exports, the Office of the Cane & Sugar Board said.

Output may surge to 7.7 million to 7.8 million metric tons for the crop year from late November, Secretary-General Prasert Tapaneeyangkul said in an interview. That would be higher than the record 7.28 million tons in 2002-2003, Prasert said late yesterday. Production was 6.93 million tons last year.

A gain in Thai output may help the global sugar market return to surplus for the first year in four and lower prices even as other food costs soar. Jonathan Kingsman, managing director of the Switzerland-based broker Kingsman SA, has forecast a global sugar surplus in the year from April 1.

“Higher production will definitely boost exports this year to more than the 4.63 million tons shipped last year,” said Prasert. The above-average rains brought by a La Nina weather pattern “improved soil moisture after the country faced drought for two consecutive years,” he said.

Raw sugar for May delivery fell 1.2 percent to 28.86 cents a pound on ICE Futures U.S. in New York yesterday. The most- active contract touched 36.08 cents on Feb. 2, the highest level since 1980. Kingsman, who’s traded sugar for more than three decades, has forecast that the October-delivery contract may slump to 20 cents this year from yesterday’s 25.08 cents.

Rising Yields

Thai cane output in the crop year from late November may jump to 74 million tons, with yields improving to 105 kilograms per ton of cane from 101 last year, Prasert said. Since the crushing season began, cane output has totaled 48.3 million tons.

About two-thirds of Thailand was affected late last year by floods, which devastated rice fields and rubber estates and contributed to higher farm-commodity prices. “Unlike Australia, Thailand benefits from La Nina,” Prasert said.

Tropical Cyclone Yasi hit northern Queensland in Australia, a region growing a third of the country’s cane, cutting output potential in the area by about 50 percent, producers’ group Canegrowers said on Feb. 4. That may keep exports from the world’s third-biggest supplier next year at a two-decade low of 2.2 million tons in 2010, according to Queensland Sugar Ltd.

Estimates of Thai sugar exports will be completed after authorities decide on the allocation for local consumption, which currently stands at 2.5 million tons, Prasert said. “We have to ensure domestic supplies are adequate before shipping the sweetener overseas,” Prasert said.

(Source: http://www.bloomberg.com/news/2011-02-18/thai-sugar-output-may-reach-record-as-yields-climb-cane-board-forecasts.html)