Rain May Curb Australia's Sugar Production Capacity for Years, Growers Say By Wendy Pugh Jan 5, 2011
Sugar production capacity in Australia may be curbed for at least two to three years because of extensive losses to planted crops and regrowth cane after floods and record rain last year, according to Canegrowers.
Heavy rain had caused localized to severe flooding in cane-growing areas from Mossman in North Queensland to Grafton in New South Wales, the Brisbane-based producers group said in an e-mailed statement today, as the effect of heavy rainfall in 2010 continued into this year.
Floods and rain cut Australian sugar output to the lowest level in nearly two decades last season, the governments commodity forecaster said last month. The La Nina weather pattern, which typically brings rain to east Australia, would likely persist into March, the Melbourne-based Bureau of Meteorology forecast today.
The production capacity for the industry will be greatly diminished as a result of the extremely wet conditions, Ron Mullins, acting chief executive officer of Canegrowers said by phone today. The rain last year washed away or prevented some planting for next season as the continuing wet conditions affected the outlook for crops, he said.
Raw sugar for March delivery fell 3.5 percent, to settle at 31 cents a pound on ICE Futures U.S. in New York yesterday. The contract reached a 30-year high of 34.77 cents on Dec. 29.
This seasons harvest ended last month as rain caused 5.7 million metric tons of sugarcane, or 20 percent of the crop, to be left in the fields, Canegrowers said. Sugar output was 3.62 million tons, compared with normal levels of more than 4.5 million tons, the group said Dec. 22.
Harvest Outlook
The leftover cane would be crushed ahead of the rest of the crop, amid uncertainty about its likely yields, Mullins said, without giving an outlook for next season. Harvest typically starts in June, with part of the crop replanted each season and the remainder left to regenerate for several years.
The cane harvest this year may struggle to make 30 million tons, Steve Greenwood, chief executive officer of Canegrowers said last week. Australia harvested 27.3 million tons this year compared with a usual range of 32 million to 35 million tons, the group said Dec. 22.
The effect on cane from floods in the past two weeks may be minor, Commonwealth Bank of Australia said in a report today.
Damage to young 2011-2012 cane growth is not expected to be brutal, and the most severe floods have been outside major producing regions, analyst Luke Mathews wrote in a report.
To contact the reporter on this story: Wendy Pugh in Melbourne at [email protected];
To contact the editor responsible for this story: James Poole at [email protected] . http://www.bloomberg.com/news/2011-01-05/rain-may-curb-australia-sugar-potential-for-years-growers-say.html
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