Low prices prevent Aussie sugar expansion

Low prices prevent Aussie sugar expansion


Farm Online News
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Australian sugar cane production is expected to remain static in the medium term according to ABARES.

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Australian sugar plantings are facing stiff competition from horticulture for hectares at present.

Australian sugar plantings are facing stiff competition from horticulture for hectares at present.

LOWER global sugar prices and competition is likely to mean Australian sugar cane production will remain steady over the medium term according to the national forecaster the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

Data released to coincide with ABARES' Outlook conference in Canberra this week has Australian cane production remaining steady over the medium term at around 34 million tonnes.

Along with horticultural demand, high land values in areas near existing sugar mills are also curtailing potential expansion of sugar cane plantings.

RELATED: Australia lodges sugar dispute with WTO

In its report ABARES said the world indicator price for raw sugar, on the New York Intercontinental Exchange,

nearby futures, no. 11 contract is forecast to fall to US12.5 cents per pound in 2018–19. 

It is currently US12.56c/pound, reflecting what ABARES data showed in regard to supply and demand, with global production is expected to exceed consumption for the second year in a row, increasing stocks. 

Internationally, the industry is closely watching government policy in India, where the government has been forced to intervene after sugar cane millers went further in arears in what they owed growers.

This is likely to have the end impact of India exporting less sugar but on the flip side, Brazil is likely to export more, filling the gap left by India's reduced supplies.

However, there is better news in the longer term, with production likely to be oustripped by consumption, partially due to a switch out of sugar in places such as Thailand, where cassava is emerging as a more profitable crop.

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