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Thai Sugar Output, Exports May Climb to Records, Millers Say

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June 7 (Bloomberg) -- Sugar production in Thailand, the second-largest exporter, may reach a record for a third year in the season from November as millers expand capacity to meet rising regional demand, according to an industry group.

The cane harvest may total 103 million to 105 million metric tons, bringing sugar output to about 10.5 million to 10.7 million tons, said Vibul Panitvong, executive chairman of the Thai Sugar Millers Corp, which represents the country’s 47 mills. Exports may exceed 8 million tons next calendar year, he said in an interview today.

Increased output will enable the country to boost supplies to Asia, where demand remains strong, Vibul said in Bangkok. The region faces a long-term sugar deficit as economic growth raises demand, with supply set to trail usage by about 3 million tons this year, Green Pool Commodity Specialists forecast in February.

“We will see sugar production and exports break a new record due to attractive cane prices and a startup of five new mills next year,” Vibul said. Cane production may climb further, reaching 130 million tons in three to five years, he said.

Raw sugar on ICE Futures U.S. has lost 17 percent over the past year on prospects for another global glut. The July-delivery contract traded at 20.31 cents a pound at 6:50 p.m. in Singapore after rising 2.1 percent as rains hit Brazil’s harvest.

USDA Forecast

Vibul’s forecast compares with the outlook from the government’s Office of the Cane & Sugar Board, which said today that sugar output may be 10.4 million tons next season from a cane crop of 100 million tons, according to Secretary-General Prasert Tapaneeyangkul. Sugar output may total 10.85 million tons in 2012-2013 from this year’s 10.42 million tons, according to a projection from the U.S. Department of Agriculture.

Thai millers are moving ahead with plans to improve the quality of their raw sugar to match output from rival Brazil and increase shipments to Asia and the Middle East, Vibul said at a press conference. Brazil is the world’s biggest sugar exporter. “We have advantages on proximity in supplying to Asian countries,” Vibul said.

Millers plan to produce so-called 99.2-degree high-polarization sugar from the 2012-2013 crop year, he said. At present, Thai raw sugar for export has a polarization of 96 degrees to 97.99 degrees for shipment to Japan, and minimum polarization of 98.5 degrees for other destinations.

The five new mills will increase crushing capacity by 10 million tons when they produce at a full capacity in the next three to five years, Prasert told the press conference.

Current season cane output was a record 97.98 million tons, yielding 10.2 million tons of sugar, the Ministry of Industry said in a statement today. Exports may total 7.8 million tons this year, of which 1.3 million tons will be shipped to Indonesia and a further 1 million tons to Japan, Prasert said.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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