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Thailand’s sugar production could reach record levels in the upcoming harvest season after the recent spate of rainfall offset the effect of a strengthening El Nino
The country’s Cane and Sugar Board policy bureau director Warawan Chitaroon said that the harvest could likely expand for a seventh year to an all-time high of 111mn tonnes in the season starting November.
Thailand produced an all-time high of 106mn tonnes of cane in the 2014-2015 season, with sugar output of 11.3mn tonnes, according to the cane and sugar board.
El Nino, the climate interaction linked to a periodic warming in sea surface temperatures across the central and east-central Equatorial Pacific, has mostly kept central Thailand dry for 30 years. Hence, it was expected that the predicted weather could limit the sugar production.
“The rains started in some areas last week, which will help reduce the impact of the drought,” said Chitaroon. “Even as prices now are lower than production costs, farmers still favour cane over other crops because it gives a stable income.”
Though the rains have been welcomed by crop growers, they could also worsen the reduction in global sugar prices that fell to a six-year low last week, said local reports.
The present El Nino, also the first one since 2010, is gaining strength and is expected to last the entire year, based on forecasts made in the USA and Australia. It is already affecting Thailand’s rice exports. Water shortage in the midst of a severe drought could reduce nationwide output by five per cent, said United Association of Thai Sugarcane Planters chairman Suchai Limsommut.
Sugar prices have tumbled 23 per cent this year to the lowest level since December 2008 last week. Futures for October delivery closed 2.4 per cent lower at 11.24 cents a pound on the ICE Futures US, after touching as low as 11.20. Futures may climb to as high as 15 cents in the second half as the current prices are attractive for building up inventories, according to Chitaroon.