Sugar production drops in Thailand due to severe drought

Sugarcane production in Thailand has declined in the 2023-2024 crop year due to a severe drought.

The Cane and Sugar Board (OCSB) warned that this could affect the supply of sugar on the world market.

The country is the world's second-largest sugar exporter after Brazil, meaning a drop in production could put pressure on the global market.

During the 2023-24 crop year, farmers delivered a total of 82.2 million tonnes of sugarcane for crushing in sugar mills, 70% of which was fresh sugarcane and the rest burnt cane.

“Our sugarcane harvest fell by 11.7 million tonnes, compared to 93.9 million tonnes for the 2022-23 crop year,” said Verasak Kwanmuang, a farmer representative who sits on the board.

"The drought has caused a water shortage, which has hit sugarcane plantations in Thailand," Verasak said.

Some 57 sugar mills produced 8.77 million tonnes of sugar and 3.55 tonnes of molasses during the 2023-24 season.

The amount of sugar amounted to 107 kilograms per tonne of sugarcane, with a commercial cane sugar rate of 12.35.

According to the OCSB, global sugar prices fell to 19 cents per pound from 25 cents per pound, following increased sugarcane supplies from Brazil and India during a sluggish global economy, which lowered demand for sugar.

The agency is concerned that if the world price continues to decline or remains low, it will affect its calculation of sugar prices for the 2024-25 crop year, which are initially estimated in the range of 25.31-27.35 cents per pound.

"Our estimate of final prices may change," Verasak said.

"This will affect domestic sugar prices and contributions to the sugarcane fund, which is facing a liquidity problem.

Sugar factory owners will also be affected.”

The OCSB forecasts an increase in sugarcane production for the 2024-25 crop year, as farmers are likely to switch from cassava to sugarcane cultivation due to higher prices.

Source: Bangkok Post