• Thailand will produce a record amount of sugar this season, exceeding last year’s output.
  • Raw sugar availability in 2019 will also be a record and will outstrip regional demand.
  • We still think 1m tonnes could be carried into 2020, with a further 800k tonnes seeking a home in 2019. 

Songkran Crush Update 

  • It’s Songkran, and at this time Thai cane crushing normally draws to a close. 

Thailand Daily Crushing Pace

  • Cane crushing in Thailand has been tailing off, with all 5 mills in the East of the country already closed.
  • However, mills in the North-East cane area are likely to resume crushing after Songkran and may continue into May. 

North-East Crushing Pace  

  • We think Thai cane crushing will fall a little short of last year’s 135m tonnes, perhaps only reaching 131m tonnes.
  • However, sucrose yields this year have been the best we have ever seen

Fresh vs Burnt Cane Percentage by Year

  • This is largely due to government incentives given to farmers to harvest fresh and not burnt cane.
  • We therefore think sugar production will sneak past last year’s 14.7m tonnes. 

Raws In Surplus 

  • As we’ve highlighted previously, this year’s production has been allocated heavily to raw sugar.
  • Thai raws availability this season will be by far a record, at 7.6m tonnes. 

Thai Raws Availability

  • This far exceeds our estimate for regional raws demand, meaning we think there is a Thai raws surplus of 1.8m tonnes in 2019.
  • We expect the industry to carry up to 1m tonnes raw sugar into 2020, when there could be a smaller cane crop owing to improved cassava returns.
  • This leaves a further 800k tonnes excess raw sugarwhich will need to be sold to destination or delivered into the No.11 futures market. 

Far East Supply / Demand Breakdown

  • At current physical values, Thai sugars are cheaper than any other origin for East Asian raws buyers, as well as places such as Bangladesh.
  • However, many raw sugar buyers have a preference for Brazilian VHP, which will need to be overcome.
  • Current white premium levels are unattractive for mills so we are unlikely to see a further increase in allocation of raw sugar for remelting into refined.
  • We will continue to monitor Thai offtake, but we think the scale of this year’s crush is negative for the N/V and V/H spread outlook.