Australia's sugar exports may be delayed after rain pushes back cane harvesting in Queensland state and disrupts crushing operations in about half the 24 sugar mills in the world's third-largest raw sugar exporter. Delays in exports could help boost sugar prices, which have surged in recent days on concern about near-term supplies in top grower Brazil and on talk of Chinese buying.
Front-month July futures jumped more than 5 percent to hit a high of 21.65 cents a lb before settling 0.89 cent higher, or 4.3 percent, at 21.42 cents a lb, on Wednesday. Australian sugar is exported primarily to Asian markets, with South Korea, Indonesia and Japan the largest buyers.
Eleven sugar mills have seen operations suspended or disrupted as a result of the wet weather. Sucrogen, the largest private owner of sugar mills in Australia, operates eight sugar mills in Queensland, and a company spokeswoman said wet weather had hit crushing operations in four regions where it operates mills.
All four of Sucrogen's Burdekin mills and its Plane Creek Mill had suspended crushing on Saturday, due to insufficient cane supply, though the company said it expected operations at the five mills to be back up by the weekend. Sucrogen is owned by Singapore-listed Wilmar International. Bundaberg Sugar, which owns two sugar mills, Heck and Son's Rocky Point mill and MSF Limited's Maryborough mill, said the mills all suffered delays in crushing.
In New South Wales state, three mills also suffered disruptions, but harvesting is later than in Queensland so the problems are not as severe. Queensland, which is home to the remaining 21 sugar mills in Australia, has been hit by unseasonably wet weather.
While the state recorded a wetter May this year than in 2011, rain this week has caused the biggest disruption. Rains of between 10 and 50 millimetres hit south of Bundaberg, the Australian Bureau of Meteorology said. "The wet weather means farmers are not able to get heavy machinery out on the land. It isn't so much the rain but we need the land to dry," one sugar mill executive said.
Further showers are forecast for parts of Queensland on Thursday, the Australian Bureau of Meteorology said, while isolated rain may hit the south of the state on. Some rain may continue into the weekend or possibly early next week, raising the threat of further disruption. Long-term forecasts are also not favourable. The weather bureau estimates a 50-65 percent chance of higher-than-average rainfall for north Queensland.
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