Australia's sugar output may drop 10-15 pct -CSR

SYDNEY,- Australia's raw sugar production could drop 10 to 15 percent in 2009/10, disrupted by flooding in the tropical state of Queensland, where more than 90 percent of the country's sugarcane is grown, sugar refiner CSR Ltd (CSR.AX) said on Wednesday.

Queensland's sugar cane growers are counting their losses after weeks of rain have left some crops underwater.

"While sugarcane is generally a resilient plant, the degree of inundation and lack of sunlight mean that the cane yield will be adversely affected," CSR said in a statement to the country's stock exchange.

About 32 million tonnes of sugarcane was harvested last season in Australia, yielding about 4.6 million tonnes of cane, similar to the year before.

CaneGrowers, the industry association that represents about 4,000 cane growers, said on Wednesday some crops had literally drowned while weeks of grey skies have retarded growth.

The Ingham district in northern Queensland has been the most severely affected.

"About 24,000 hectares of the 52,000 hectares of cane around Ingham was at some point inundated, be it for 3 days to over two weeks," said CaneGrowers Chief Executive Ian Ballantyne.

"The big impact is loss of cane around Ingham and the lack of sunshine over the last month which means a lack of growth that can't be got back."

Receding floodwaters have revealed damage to infrastructure such as rail lines linking sugar farms to crushing mills while debris has been washed onto cane fields.

The setbacks come as canegrowers were looking forward to higher returns as supplies around the world tighten due to lower production in countries such as India, the world's number two producer of the sweetener.

Indian farmers switched from sugar to crops offering higher returns.

Government officials and traders have forecast India's sugar output will fall by nearly a third to around 18 million tonnes in 2008/09 from 26.3 million tonnes a year earlier.

Largely ignoring turmoil in financial markets, sugar prices have been on an upward trend, rising nearly 10 percent since mid-December on expectations the world will face a deficit of sugar this year.

Last week, Lausanne-based Kingsman forecast a global sugar deficit of 9.66 million tonnes in 2008/09 and gave its first projection for the 2009/10 sugar supply/demand balance, predicting a modest 1.6 million tonne deficit.
source:Reuters