Australian sugar group Canegrowers said 18 percent of the 2010 sugar crop has been left unharvested due to heavy rains that decimated growing regions, with next year's plantings also showing damage. The fresh concerns over sugar yields from Australia, one of the world's top exporters, pushed sugar prices already at their highest in 30 years further upward.
Weather forecasters see a greater-than-normal chance of rain next three months in Australia with wet conditions expected to persist in sugar-growing districts over the holiday period. Extraordinary rainfall in eastern Australia in November and December kept the sugar content in the cane low, making it less profitable to mill, Steve Greenwood, chief executive of Canegrowers told Reuters.
"Boggy fields kept the harvest machinery from being able to bring in the crop, leaving up to 18 percent of the crop unharvested and stood over until next season," Greenwood said. Australia is one of the world's largest exporters of raw sugar, along with Brazil and Thailand. Australia's crop-drenched yield this year has helped propel sugar prices to record highs last seen in the 1980s.
The March raw sugar contract was last quoted at 33.22 cents a pound - after closing Wednesday at a 30-year settlement high of 33.13 cents - pushed higher by fresh concerns over the Australian crop. Sugar prices are moving into a new price arena due to low stock levels and strong demand, and are in a bullish market environment as year-end approaches, commodity merchant Czarnikow said this week.
It cited a deteriorating outlook for the 2010/11 global sugar balance and limited Brazil off-crop supply. The Australian sugar rush this year was short-lived, as torrential downpours on the eastern-seaboard washed away hopes of a record season and has continued to cause adversity in the field, Greenwood said. "Of the cane that has been planted, a significant percentage has been damaged from rain," he said. "We may a see lot more wet weather over the next couple of months that we really don't need." Canegrowers estimates that 27.3 million tonnes of cane was cut in the 2010 harvest, against a usual range of between 32 million and 35 million tonnes.
Raw sugar content has dropped to 3.62 million tonnes from a usual range of between 4.5 million tonnes and 5 million tonnes, according to Canegrowers, which represent almost all of the nation's sugar growers. Australia this month was forced to slash its 2010/11 sugar export forecast by 25 percent and the nation's biggest sugar exporter, Queensland Sugar Ltd (QSL), plans to acquire more raw sugar from Brazil and Thailand to meet its export commitments following the wettest spring on record.
The chances of receiving above median rainfall during January to March are between 60 percent and 70 percent across the eastern half of New South Wales, south-eastern Queensland and Western Australia, according to the Bureau of Meteorology.
Torrential rains across eastern Australia's farm belts also have battered the wheat crop. Much of what is expected to be a record grain harvest has been downgraded to animal feed. Further rains also come as the nation's coal miners only now start to recover from flooding at collieries and transport disruptions. Queensland's Dalrymple Bay coal terminal was able to resume loading on Wednesday after flooding cut deliveries to the terminal, leading to a 1-1/2 day suspension.