• We expect Thai mills to crush 120m tonnes cane in 2019/20, down from 131m tonnes this year. 
  • Sugar production will therefore fall by 1.7m tonnes year-on-year. 
  • But sugar availability may actually rise as we expect 2m tonnes Thai sugar to be carried from this season into next.  

Lower Sugar Production

  •  We currently estimate 2019/20 sugar production to be 12.9m tonnes vs 14.6m tonnes in 18/19. 
  • This is driven by our forecast that 120m tonnes of cane will be crushed next year, down from 131m tonnes this season. 
  • This is largely because farmers in the North and North East of the country may switch some cane acreage to cassava. 
  • We are also concerned that sucrose yields may be worse year on year if dry weather persists. 

Sugar Production

  • We think that exportable supply from sugar produced in 2019/20 will be 9.6m tonnes, 2.2m tonnes less than this year’s. 

Thai Raws and Whites Availability

  •  However, with Thailand expected to carry substantial volumes of raws and white sugar into 2020, export availability may actually increase! 

Cane Area Impacted by Falling Cane Price

  • We expect cane area to reduce by 4% in 2019/20 due to a significant switch to cassava. 

Thai Cane Production

  •  Most of this switch will occur in the North and North East region where the farms sizes are less than 1ha on average.  
  • This makes farmers extremely sensitive to crop returns, and they can switch crops rapidly.  

Cane Area by Region

  •  Cassava is drought-tolerant and has similar soil requirements to cane. 
  • Due to falling cane prices, cassava returns are now better than cane returns for farmers.  

Thai Cane Price

Thai Farmer’s Returns

  Further Weather Risk?

  • Our current cane and sugar estimates could be reduced should rains disappoint in 2019. 
  • Weather has been hot and dry in Q1’19; this is fine because the first quarter of the year is the dry period and is not important for cane development. 
  • However, the Thai Weather Bureau forecasts below-average rainfall for 2019, and if this comes to pass we would reduce our cane and sucrose yield estimates.  
  • 85% of Thai cane is un-irrigated and relies solely on rain for moisture.  

Thailand Monthly Rainfall

Cumulative Rainfall since 1stJanuary till 27th May