Australian cane producers bowed to concerns over a mystery crop disease and slashed to 100,000 tonnes their estimates for the rise in output as sugar mills began the 2013-14 crushing season.
The CaneGrowers industry group cut by 1.0m tonnes to 30.5m tonnes their forecast for the newly started Australian cane harvest, citing flooding and the spread of so-called "yellow canopy syndrome".
Little is known about the disease, which turns cane leaves yellow and causes roots to rot, and has been identified in the Burdekin, Cairns, Herbert and Tully regions of north Queensland, the centre of Australia's sugar industry.
CaneGrowers said that while "the full effect of yellow canopy syndrome on this season's harvest will take months to be properly evaluated", its downgrade reflected the "unknown impact" of the disease.
The downgrade leaves the CaneGrowers estimate in line with that from the Australian Sugar Milling Council, which cut its forecast to 30.5m tonnes two weeks ago.
And it puts in doubt a continuation of the recovery in output in Australia, the third-ranked exporter, from a 19-year low of 3.7m tonnes reached in 2010-11.
Sugar production in 2012-13 is pegged at about 4.3m tonnes, from 30.4m tonnes of cane, and officials at Australia's Abares commodities bureau have forecast a continued gentle recovery, to 4.54m tonnes in 2013-14, rising to 4.88m tonnes by 2017-18,
It also represents a rare setback to prospects for world sugar output, which are being underpinned by a strong start to the cane harvest in Brazil, the top producing and exporting country.
Paul Schembri, the CaneGrowers chairman, said that cane producers were "still positive" about the cane crush, despite the yellow canopy syndrome outbreak, and early-year flooing "which wiped out the young cane on many farms".