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Analyst Insights Analyst Insights Strong Rains Mean Thai Cane Could Rebound in 2021/22

October 19, 2020

1 min read

Strong Rains Mean Thai Cane Could Rebound in 2021/22

  • Thailand has suffered from drought for the past two years.
  • Its cane and sugar production have been poor as a result.
  • However, new irrigation systems and improved rainfall have increased water availability, so we think production could rebound in 2021/22.

Thailand’s Rainfall Improves at Last

  • After two years of drought, Thailand’s rainfall is starting to improve, but still sits behind the 30-year average.
  • So far in 2020, Thailand’s rainfall amounts to 1,261mm, up 112mm year-on-year.
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  • As you can see below, the drought started in late 2018 and came through more severely in 2019.
  • Since then, we’ve seen improvements in the key cane areas of the Central and the Northeast.
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  • Despite this, Thailand still needs a lot more rain if its cane yields are rebound fully in 2021/22.

Thailand Needs More Rain to Save Cane

  • Thailand’s major reservoirs provide its cane key fields with critical irrigation.
  • Most of these are situated in the Central and Northeast regions.
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  • As it stands, these reservoirs are 67% full.
  • This is less than ideal because less water in these reservoirs means a weaker ability to provide cane with water during the dry period, which spans across November to April.
  • These reservoirs need to be 80% full before we can confidently say that Thai cane yields will recover back to historical levels, such as those seen in 2017/18.
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Will These Late Rains Prompt a Recovery for the 2020/21 Cane Crop?

  • In short, no.
  • The main reason Thailand’s cane crop is going to be poor 2020/21 is not due to the weather, but because farmers decided to plant more cassava than cane this time last year, in search of greater returns.
  • In fact, Thailand’s cane yields have actually shown a 7.5% recovery this year.
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  • And sadly, it’s now too late for the forthcoming cane crop.
  • The cane needed this water more than three months ago, when it was far drier.
  • Excess water ahead of the crush, which is due to start in December, could actually have a negative impact on the sucrose yields and reduce sugar production.
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