Most analyst agree even though global production is set to fall in 2018/19, given that stock levels remain burdensome, we probably won’t see higher sugar prices this year unless something catastrophic happens.
Here in Australia, sugarcane producers in North Queensland are beginning to assess the impact of a heavy rain event over the past week or two. According to the CANEGROWERS organization, the monsoon deluge has resulted in thousands of hectares of flooded cane farms from Mossman to Cairns in the north right down to the Herbert/Burdekin and the Central region. If cane fields are left standing in flood waters too long, there will be a negative impact on yields and sugar content (from stunted growth and side shoots) once the harvest commences in June.
We of course acknowledge flooding has occurred in major towns and some cane farming families have suffered water in their properties: certainly catastrophic for those involved (our thoughts are with all affected).
The adverse impact of the flooding on sugar production prospects will take some time to understand but there is a high probability that in the end the 2019 cane crush will be moderately lower than the 32.5 mln tonnes seen in 2018 (2.6% below the 2017 crush of 33.3 mln tonnes). With a probable lower average CCS level in the affected areas, Australia’s sugar production will certainly come in lower, but nobody knows at this stage how much below the approximate 4.6 mln tonnes seen from the last crush. Australia’s sugar production has varied between 4.4 mln tonnes and 4.9 mln tonnes over the past 5 years.