Insight Focus
Dry weather has affected Thai cane growth. We retain our 66.5m tonne cane crop forecast for the coming season. Thai raw sugar export availability will be among the lowest in recent years.
Thailand Expects Double El Nino
When we announced that we expected next year’s Thai cane crop to only reach 66.5m tonnes, it caused a bit of a stir in the sugar market. Most people were hoping for a repeat of last year’s cane crush near 90m tonnes of cane.
Since this time, much of the Thai cane milling industry has lowered their forecast for the coming season to 70-75m tonnes. This is because El Nino has led to dry weather in Thailand this year, hurting cane development. In fact, local experts are talking of the risk of a double El Nino.
Cane needs around 1,500mm of rain each year to maximise its development. As of August, Thailand had only received 810mm of rain, far below recent years and the 30-year average. Cane crushing is due to start in just 3 months.
However, rainfall in May-Aug has been close to normal.
A look at its distribution reveals that it’s still been deficient in the North, parts of the Northeast and Central regions where most sugar mills are located.
We therefore decided to get back onto the road to see if we needed to change our cane forecast.
The Lower Northeast Cane Tour
We visited Nakhon Ratchasima and Chaiyaphum. These are core sugar cane growing regions and also a major cassava area.
From our trip, it was clear that the delay of rains earlier this year has led to delayed cane growth too.
Cane is Still Very Young Due to the Delay of Planting
We are now concerned that cane won’t be fully mature by the time harvesting begins in December.
A Short in Length of Each Joint Represent the Lack of Rainfall
We are therefore keeping our existing cane crop forecast of 66.5m tonnes unchanged.
There’s been no significant positive improvement in the crop since we last investigated.
Corn Harvesting Area Observed to be More Competitive This Year
The only good news to report is that because of the dry weather, sucrose yields in the cane will be high. Last year’s drought affected cane reached 11.8% sucrose yield. We think the sucrose yield in the coming season will be at least 11.2%.
23/24 Thai Sugar Outlook – Opportunity and Risk
The shortfall in sugar production means that Thailand will have little sugar for export. What is available will be mostly sold as white sugar or refined given the strong white premium currently on offer. Thai raw sugar export availability will be one of the lowest in many years, at around 1.7m tonnes.
So far, pretty dismal news. Only heavy rainfall between now and October can improve the outlook. We will plan another crop tour around that time for a final check before harvest.
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