SUPPLY SLUMP SWEETENS POTENTIAL FOR THAI EXPORTS

       The price of sugar has risen to its highest level in 28 years due mainly to severe drought in many countries particularly India, which has resulted in shortage of supply in the global market.
       Thai Sugar Millers Corporation (TSMC) said yesterday that the primary price of sugar cane for the new crop will hit Bt1,150 per tonne, which is the highest since 1982.
       Prakit Pradipasen, chairman of TSMC, said the price will remain at these levels with increasing demand in the world market.
       He added that sugar price in the world market had increased by 20 cent per pound due to decline in sugar production in many countries following drought.
       "Sugar-price trading in the futures market has skyrocketed 24.78 per cent per pound in March 2010. If the price keeps rising, the final price of sugar cane should be higher than the estimated primary price of sugar cane of Bt950 per tonne for the harvesting season 2009/10," said Prasert Tapaneeyangkul, secretary-general of the Office of Cane and Sugarcane Board (OCSB).
       If the final price of sugar cane is higher than the primary price, sugar manufacturers will need to pay the additional amount to sugar-cane growers for that season.
       The primary price of sugar cane in 2008/09 was Bt830 per tonne, while the final price was forecast to be around Bt860 per tonne, he said.
       He is confident the price of sugar cane in 2009/10 will be higher than last season, which should be higher than Bt980 per tonne.
       The main factor pushing up the global sugar price was India, which has shifted from being a sugar exporter to importer because of the drought situation, he said.
       "India's sugar stocks have been decreasing, from 9.3 million tonnes last year to 7.5 million tonnes this year. It will further drop to 5 million tonnes in 2010," he said.
       The Indian Sugar Mills Association has estimated that sugar output in India would reach 19 million tonnes next year from 14.7 million tonnes this year.
       However, it is believed that sugar production would be only 16 million tonnes next year because of poor sugar cane species and the impact of climate change.
       India currently consumes around 22 million tonnes of sugar each year, which has tended to increase following the economic recovery and its huge population.
       Vibul Panitvong, executive chairman of Thai Sugar Millers Corporation, said the price of sugar cane could rise to Bt1,100 per tonne in the year 2009/2010 due to the skyrocketing price of sugar.
       "The higher sugar price will hike the total value of Thailand's sugar exports from US$1.5 billion (Bt51 billion) this year to $2.5 billion in the coming year," he said.
       Besides India, he said the world's largest sugar exporter, Brazil, would also not be able to make up the shortage in supply despite boosting its sugar-cane output.
       "The higher output will go towards serving 30 new ethanol plants in Brazil. Presently, 57 per cent of total sugar cane output in Brazil is used to produce ethanol, and the rest 43 per cent is used to produce sugar," he said.
       Brazil is expected to increase its sugar exports from 31 million tonnes this year to 33 million tonnes next year.
       Due to lower sugar export from India and other countries, it will be a good opportunity for Thailand to boost its exports and for local sugar-cane growers who will be able to sell the sugar cane at a better price.
       The output of sugar cane in 2009/10 is expected to be around 71.6 million tonnes, up from 66.46 million tonnes in 2008/09 as a result of high rainfall. Consequently, sugar production will increase from 7.19 million tonnes to 7.64 million tonnes. However, Thailand's main obstacle is to improve sugar-cane yield and the structure of benefit sharing.
       Vibul said Thai sugar manufacturers have expanded their business to neighbouring countries such as Laos and Cambodia because of limited agricultural areas in Thailand and tariff incentives to export to European Union countries.
       He said Thailand's subsidy system has created price distortions and reduced the overall industry competitiveness.
       In 2007, the Cabinet put the development of the sugar-cane industry on the national agenda, to be completed in three years.
       "It's shameful that though we proposed an annual budget of Bt1.1 billion for three consecutive years, the government has not approved it at all. Therefore, it is difficult for us to move forward with the projects in the national agenda," Prasert said.
       There are five development plans in the national agenda: research and development of cane species, value-added creation of by-products from sugar cane, productivity improvement, alternative energy, and corporate social responsibility.

BT10M EARMARKED TO BOOST ROD DEE MARKET SHARE

       Thai Preserved Food Factory is investing Bt10 million on reinforcing its position as leader in the dehydrated soup market.
       The company, manufacturer and distributor of instant and dried noodles under the brand of Wai-Wai and Quick Formula, said yesterday that it wanted to directly focus on its target group.
       Managing director Benyapha Prinnarat said the company has been receiving good feedback after it launched dehydrated pork and chicken flavoured soup powder under the "Rod Dee" brand at the beginning of this year.
       In response to a higher demand, she said, the firm has added two new flavours - spicy soup with lemon and spicy soup - to its list of dehydrated soup products in the second half of this year.
       The company plans to penetrate the low-income market by setting up booths at open markets as well as making its products available at retail and wholesale stores nationwide.
       Rod Dee currently holds 62 per cent of the dehydrated soup market, which is known to grow 30 per cent annually. Currently, the total dehydrated soup market accounts for Bt5 billion.
       Benyapha said the company expects Rod Dee's market share to be boosted by 5 per cent this year, and by up to 10 per cent next year.

Sugar mills step in to cool prices

       India, importing sugar for the first time in three years, said yesterday mills agreed to boost the availability to cool record prices.
       "The mills are ready to find some solution where we will be able to improve availability in the open market and in the public distribution system," Farm Minister Sharad Pawar said told reporters after meeting producers in New Delhi.
       Sugar has advanced 62% this year in Mumbai's Vashi, the largest wholesale market, on concern drought in the biggest cane-growing states will curb prospects for the Indian crop, the world's secondbiggest.
       The monsoon, which brings threequarters of the nations annual rains,may be the driest in 15 years, the weather bureau said last week.
       "Production may drop to 14.8 million tonnes in the year ending September,from 26.4 million tons," said Samir Somaiya, president of Indian Sugar Mills Association, repeating a previous forecast.
       The nation consumes 22.5 million tonnes annually.
       India has contracted to import 2.9 million tonnes of raw sugar so far this year, Pawar told the parliament last week.
       Sugar reached a 28-year high of 23.33 cents a pound in New York on Aug 12 and was at 21.51 cents in after-hours trading at 4 p.m. Mumbai time yesterday.Prices in Vashi jumped 4.5% to 3,082 rupees for 100 kilograms after dropping 3.2% on Aug 14.
       "Output in the year starting Oct 1 may be 18 million tonnes," Vinay Kumar,managing director of the National Federation of Co-operative Sugar Factories Ltd, said last week.
       His forecast is higher than 16.5 million tonnes predicted by Maharashtra State Co-operative Sugar Factories Federation Ltd, and 15 million-to-16 million tonnes estimated by Bajaj Hindusthan Ltd.
       To be sure, rains have returned in the northern and central Indian states the past few days, helping ease dry weather thats caused drought in as many as 209 of the country's 626 districts, the weather office said yesterday.
       Uttar Pradesh, the biggest cane grower,Madhya Pradesh, the largest soybeans producer, and Bihar, a top grower of rice and corn, received good rain over the past few days, Ajit Tyagi, director general of the India Meteorological Department, said.
       Sugar fell for a second day in London on speculation recent rain in India will improve prospects for the harvest in October. White, or refined, sugar for October delivery lost 1.6% to $544.2 a metric tonne by 11.22 a.m. on the Liffe exchange.