Thai Cane & Sugar Industry on World Market Speculation, Hoping for High Cane Prices

Thailand’s cane and sugar industry is currently formulating a management guideline for the production year of 2020/2021, focusing on enhancing production capacities for as many tons of sugar as possible. Also, harvesting of fresh cane is encouraged to reduce burning cane apart from asking for cooperation of everyone. Local cane farmers are expecting for the increase of cane prices to 800-900 Thai Baht after the world market price started to reach 14-15% per pound. After facing problem on low prices of cane and low average amount of cane to only 67 million tons, concerned people in the industry indicated that it might take a couple of more years for Thai cane to return to 100 million tons.

The Director of Thai Sugar Miller Co. Ltd., Mr. Rangsit Hiangrat revealed that a recent meeting of executive boards of 58 sugar mills in Thailand had discussed about the management guideline for cane extraction in the production year of 2020/2021 which would begin at the end of this year. The meeting also emphasized on enhancing capacities of as much sugar extraction per a ton of cane as possible so that local farmers earned most from cane farming. However, it is expected that the amount of cane for extraction may not reach 70 million tons due to severe drought despite heavy rain in many areas of the country.

To make things worse, Thai farmers turned to other kinds of crops instead of cane because they enable the farmers to earn more. Sugar mills will therefore cooperate with local farm owners to plan for product harvesting that serves the needs of individual sugar mills. Cane harvesters will be provided to contracted farm owners so that a lot of fresh cane with good quality will be sent for extraction and cane leaves will be bought to use as fuel, another way to allow farmers to earn more from planting cane.

“The survey on cane plantation areas in July suggested low amount and bad quality of cane for this year due to severe drought that damaged cane stump. It results in the low amount of cane for extraction. As a result, every sugar mill will support farmers and assure them that production power is sufficient under timeframe without any leftover cane. Farmers may not have to rush harvesting cane by burning all of it because burnt cane will yield bad sugar quality, hence finally affecting income farmers will gain,” stressed Mr. Rangsit.

A source from Office of the Cane and Sugar Commission (OCSC) revealed that cane prices at the initial stage of extraction in 2020/2021 tended to stay between 800 and 900 Thai Baht per ton averagely after the market price of raw sugar worldwide increased up to 14-15% per pound owing to a decrease of world sugar. A major factor is a decrease of local sugar product in Thailand because of drought. Governmental sectors, factories and cane farm owners estimated only 67 million tons of sugar averagely.

At present, everyone concerned with the issue, namely sugar factories, cane farm owners and governmental agencies, is finding solutions to problems on transfer sugar under the previous contract of extraction in 2019/2020 in which many sugar mills had to delay the transfer because they made a contract to allow sugar overselling as they did not expect a decrease of cane. The mills then proposed to buy raw sugar from Thai Cane and Sugar Co., Ltd. (TCSC) which has 800,000 tons of sugar now. Nevertheless, even though some cane farm owners do not object to the procedure, it does not comply with the regulations, so amendment is necessary.

In addition, the Federation of Sugarcane Planters of Thailand and the Cane Planters Association for Zone 7 reported that the lowest price of cane that could encourage people to grow more should be 1,000 Thai Baht per ton because farm owners would have some profits to grow new cane or fertilize it. However, they accepted that price estimation derived primarily from the world market price of raw sugar. In case of the price of 1,000 Thai Baht per ton, the world market price should be around 17 cents a pound.