Australia’s sugar exports will, rather than rising as had been expected, fall to a seven-year low, undermined by the dent to the country’s cane from deficiencies in rain - and frost – US officials said.
Australia, the world’s fourth-ranked sugar exporter after Brazil, Thailand and India, will ship 3.40m tonnes of the sweetener in 2020-21, the US Department of Agriculture’s Canberra bureau said.
That is below the 3.54m-tonne figure that the USDA has officially pencilled in, and would represent the weakest figure since 2013-14, assuming bureau estimates are correct.
The country’s, small, volumes of refined sugar, bought in the main by Singapore, would at 100,000 tonnes match the lowest in 19 years.
Covid, and cane
The bureau said that its downgrade was in part down to “stronger competition from other exporting countries” thanks to the coronavirus pandemic, and in particular its impact on depressing fuel prices and prompting many mills to raise the mix of sugar rather than ethanol in their output.
Covid-19 has reduced “demand for gasoline which in turn has reduced ethanol demand and diverted some world sugar cane production back towards increased sugar production”, the bureau said, highlighting too a setback to sugar demand from the food service sector, which has been hit by lockdowns.
However, the cut to export hopes was in the main down to a “downward revision in sugar cane production caused by below-average rainfall and lower sugar content of the cane”.
Cane production was pegged at 31.0m tonnes, a rise of 1.0m tonnes year on year, but 1.0m tonnes below the USDA’s official figure.
The output downgrade “is due to a dry period from September to November 2019, during the early production phase of this crop, having a greater impact than first estimated,” with below average rains from December to August contributing too to weaker-than-expected cane yields.
As for mid-September, mills had crushed 16.2m tonnes of cane below the 17.4m tonnes at the same period of last year, and the 20.6m tonnes two years ago.
Furthermore, sugar levels in cane had, at a cumulative 13.17 so far as measured by the commercial cane sugar (CCS) standard, fallen short of a figure of 13.49 last season, and the 13.86 at the same period of 2018-19.
“A key factor is that frosts in the winter period encourage higher sugar production in sugar cane plants.
“The winter period in most sugar cane growing regions in 2020 has been mild with reduced frost events compared to the prior year.”
Cane vs nuts
The downgrade comes a week after Abares, the official Australian commodities bureau, also cut its estimate for domestic sugar output in 2020-21, by 294,000 tonnes to 4.10m tonnes, although without giving an explanation.
Abares - which has stressed that Queensland has missed out on much of the rain which has refreshed neighbouring New South Wales - held its forecast for 2020-21 sugar exports at 3.75m tonnes, which on its data would represent a six-year low.
The USDA bureau also highlighted the question mark over the future of the Maryborough cane mill after following the announcement by operator MSF Sugar – which is owned by Thailand-based Mitr Pohl – of the same of 5,400 hectares of land and 8,060m litres in water entitlements.
The buyer, Rural Funds Management, is to expand its macademia nut production.
The deal has “industry questioning the medium-term viability of the sugar mill”, the bureau said. MSF Sugar said last month it was “examining options” for crushing the area’s cane.