The enjoyment in high sugar prices for sweeteners may not last long as Thailand’s sugar production is poised to rebound next cultivation after the worst drought in 40 years, which will impact heavily on the bullish sugar price.
Yesterday, Thai sugar exporters were hit by an anti-dumping measure by the Vietnamese government by hiking duty for raw sugar from Thailand by 33.88% to domestic producers.
Thai exports, consisting of Khonburi Sugar Public Company Limited (KBS), Khon Kaen Sugar Industry Public Company Limited (KSL), Buriram Sugar Public Company Limited (BRR) and Kaset Thai International Sugar Corporation Public Company Limited (KTIS), stated that the impact from the anti-dumping measure by the Vietnamese government will have a limited impact on the revenue due to a low export volume to Vietnam.
After a skip of a heartbeat, Thai exporters will face another hurdle as Thailand is projected to increase its sugar production at a more modest pace to 9.4 million tons in 2021-2022, compared with an estimate of 8 million tons this year due to the drought.
White sugar premium to raw sugar climbed to a six-month high in January as low output in Thailand and the European Union this season, coupled with a shipping container crunch in top consumer India, tightened the market.
According to the data compiled by Bloomberg, white sugar futures rose to more than a three-year high in January 2021 at 467.50 dollars a ton. The premium slipped after making the high and then started to pick up again to make a new high at 479.90 dollars a ton on February 11, 2021. However, it could begin to drop as the world’s second-largest exporter is expecting to rebound next year.
“The rising global price will increase sugarcane prices in Thailand and motivate farmers who had already decided to cancel sugarcane-growing to return to cultivation again,” Industry Minister Suriya Juangroongruangkit said in an interview. “Sugar factories are also incentivizing farmers to increase their cane cultivation as the rainfall forecast for next season will be better.”
An improving weather outlook in 2021 will lift prospects for cane plantings that usually begin in April. The Thai meteorological department predicts near normal to 20% above-normal rainfall in cane-growing areas of central and northeastern Thailand in the two months through April.
In addition, the strong rebound in Thailand’s sugar output will also curb demand for raw sugar from re-export refineries, and push the global surplus up 29% to 5.3 million tons in 2021-22, stated Czarnikow