El Nino brings sweet deals to cane growers

       Local cane farmers and the sugar industry are expected to benefit from high global sugar demand and prices over the next 2-3 years, according Sirivuthi Siamphakdee, vice-chairman of the Thai Sugar Millers Corporation.
       Climate change as a result of the El Nin~ o effect will likely continue to suppress global sugar production in the coming years.
       Global sugar production is growing yearly but at a slower pace than demand, as the climate change have an impact on the yields of the world's large sugar producers.
       "Since weather is an uncontrollable factor, finding solutions to this problem may take two or three years so sugar prices should be high for a while," Mr Sirivuthi said.
       As well, production costs are likely to be steady or to increase because crude prices are projected to rise further in line with the recovering global economy.
       In addition, Mr Sirivuthi said global sugar demand was not the sole dominant factor in determining its price.The product has in recent years become an appealing commodity for speculation.
       "White refined sugar is trading in the global market at about $580 per tonne at present, with a trend to rise to $600 sometime soon. So the overall outlook of the industry's income from exports will still be bright over the next few years," he said.
       At this rate, exported sugar remains relatively more expensive than domestic sugar and does not provide a persuasive margin for traders to smuggle the domestic output for sale to overseas consumers.
       Chalush Chinthammit, assistant vice-president of KSL Group Plc, pointed out that local authorities should find measures to block illegal attempts to export local sugar only when the export price surges above $600 per tonne.
       "Next month, related industry bodies will discuss domestic sugar allocation for the following harvesting year, which should be higher than this year's allotted quotas due to the yearly increase in domestic consumption," Mr Chalush said.
       "So even if the export price is higher,ensuring sufficiency of domestic consumption is the first priority."
       So far, millers and farmers have sold 72% of the export quota in the 2009-10 harvesting year at an average price of 18 cents per kilogramme.
       The earlier-than-usual selling agreements are attributed mainly to the attractive price.
       Thanks to these factors, local cane farmers can expect to receive more than 1,000 baht per tonne for their cane, compared to 830 baht in the 2008-09 harvesting season.
       The crops with higher CCS or sweetness yield should fetch even more per tonne, an incentive for cane farmers to work harder to increase their yields and expand cultivation land.
       Mr Sirivuthi, also president of the Thai Ethanol Manufacturers Association, also discussed the ethanol price outlook, saying that the price of molasses had risen lately due to seasonal tight supply, which should improve when the cane-crushing season starts in November.
       He still insists the molasses price increase has nothing to do with expensive sugar prices.
       "One way to solve this is for petrol operators to increase their ethanol stocks. The Energy Ministry has introduced this initiative, as well as regulations to stabilise the ethanol price,"said Mr Sirivuthi.