Australia sugar output seen flat for next 5 years

SYDNEY - Sugar exports from Australia, the world's third-largest exporter of the sweetener, are expected to remain relatively flat over the next five years as the amount of land used for sugar cane growing slowly contracts. The government's chief commodities forecaster, the Australian Bureau of Agricultural and Resource Economics, said on Tuesday raw sugar production was likely to remain under five million tonnes over the next five years, having last exceeded five million tonnes in 2005/06.

ABARE expects production to dip to 4.56 million tonnes in 2009/10 from an estimated 4.66 million tonnes in 2008/09 due to flood-damaged crops in the tropical state of Queensland where more than 90 percent of Australia's sugar is produced.

Flooding in early February probably reduced sugar yield potential for the 2009/10 sugar cane harvest by about 6 percent, ABARE said.

The bureau projects production to recover to 4.89 million tonnes in 2010/11 and remain around that level for the next two years.

Exports are expected to dip to 3.28 million tonnes in 2009/10 from an estimated 3.49 million tonnes in 2008/09 before recovering to around 3.5 million tonnes out to 2013/14.

ABARE said urban encroachment and competition for land use from other crops meant there was little scope for expansion of sugar cane areas in Queensland and New South Wales states where the remainder of the country's sugar industry was located.

Also impacting on production were lower yields due to sugar cane smut disease spreading to most cane growing areas following an outbreak in 2006, the forecaster said. Cane growers are being forced to use lower yielding cane varieties which are resistant to smut.
source: reuters