Sugar crop could reach all-time high after rain
Bloomberg News Agency
Recent rain in the last few weeks could reduce the impact of the drought and offset the negative effects of a strengthening El Nino and boost sugar crop growth. This year's sugar harvest could well reach a record high of 111 million tonnes (in the season starting in November), yielding 11.5 million tonnes of sugar. Thailand, the world’s second-biggest sugar exporter, produced a record high of 106 million tonnes of sugar cane in the 2014-15 season, with sugar output of 11.3 million tonnes.
The recent crop-saving rain could worsen the slump in global sugar prices, that last week fell to a six-year low. Global sugar supplies have outpaced demand for five straight years, and good weather in top exporter Brazil will help boost global supply and further reduce global sugar prices. Sugar prices have tumbled 23% this year to the lowest level since December 2008. Even though prices now are lower than production costs, farmers still favour sugar cane over other crops because it gives them a stable income.
This is the first El Nino since 2010 and it is getting stronger and is expected to last into next year, according to forecasters in the US and Australia. The El Nino weather pattern affects weather worldwide, including making parts of Asia hotter and is already reducing the outlook for Thailand’s rice exports. The water shortage amid severe drought could reduce output nationwide by 5%.