Sugar Output in Thailand May Miss Target as Drought Cuts Yields

Thailand, the world’s second-biggest sugar exporter, may produce less sweetener this year than forecast as dry weather shrinks yields, according to Thai Sugar Millers Corp.

Output may total 11 million metric tons in the year started Nov. 25, less than the 12 million tons estimated, said Sirivuthi Siamphakdee, a spokesman for the Millers Crop., which represents 51 producers. The cane harvest will be 105 million tons, less than the 110 million forecast, he said. Sugar output totaled 10 million tons in 2012-13.

Raw sugar futures in New York rallied 8.2 percent this year on concern dry weather from Brazil to Australia may hurt crops, reducing a global glut. A prolonged dry season in Thailand may also lower production next season, Sirivuthi said. A drought has spread across 32 out of 77 provinces in Thailand, shriveling crops from rice to rubber, according to the farm ministry.

“We’re very worried that this extremely dry weather may persist and deteriorate cane quality, which may cause a delay in the start of the next crushing season,” Sirivuthi said. Most mills may stop crushing by the middle of April, about two weeks earlier than normal, he said.

Sugar output totaled a record 10.5 million tons during the first 120 days of the current season that started on Nov. 25 from crushing 96.9 million tons of cane, according to the Millers Corp.

“Drought has reduced the tonnage of cane available from northern and northeastern provinces of Thailand, but at the same time, sugar content has increased, so there has been some compensation,” Tom McNeill, a director at Brisbane-based researcher Green Pool Commodity Specialists, said in an e-mail. “There is still plenty of Thai sugar in stock and the market will find it difficult to rally significantly while large stocks in Thailand, India and China are in place.”

Futures in New York rallied 6.8 percent last week, the biggest weekly advance since September 2012. The contract for May delivery fell 1 percent to 17.81 cents on ICE Futures U.S. at 5:50 p.m. in Singapore today.

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