Expectations for Australian sugar production remain widely spread even heading towards the cane harvest's dying days, as analysts struggle to get a handle on the hangover from a wet summer, which culminated in Cyclone Yasi.

Abares, Australia's official crop bureau, two weeks ago lifted its estimate for sugar output from the world's third-ranked exporter by 350,000 tonnes to 4.2m tonnes, noting a legacy of cane left uncut because of downpours last season.

"The harvest started nearly a month earlier than usual on the extensive areas of cane stood over from 2010–11 because of unusually wet weather in late 2010," the bureau said.

And output could end up even higher, thanks to a strong end to the season, as growers tap into better-quality cane, US Department of Agriculture attaches in Canberra said in a briefing publishing overnight.

"Some of the best sugar yields have been achieved just prior to writing this report," the attaches said.

"Industry sources place the upside potential of the crop at 4.4m tonnes."

'Mixed bag'

Michael Creed, agribusiness economist at National Australia Bank, said that sucrose levels had reached record levels in some regions, notably in northern Queensland, the main sugar-producing state.

However, he limited to 3.8m-3.9m tonnes his forecast for overall output, "not as high as hoped, and following a very difficult season for producers and mills".

"The crop has been inconsistent across regions, with the old crop standover cane yielding more poorly than expected," Mr Creed added, terming the cane harvest a "mixed bag".

Meanwhile, the International Sugar Organisation on Thursday highlighted a succession of downgrades by industry group Canegrowers to Australia sugar hopes, blamed on "the extraordinary wet summer" in Queensland, and debris and cane damage stemming from Cyclone Yasi, the state's worst-ever storm.

"The cane crop may come in below 30m tonnes, well below the usual 32-35m tonnes," the ISO said.

'Light at the end of the tunnel'

The debate over Australia's cane harvest, which typically runs from June to November, comes at a sensitive time for the world market, with the extent of an uptick in sugar availability in the closing months of 2011 seen as potentially having a large impact on prices.

Abares and the USDA attaches estimated Australia's sugar exports at 2.8m tonnes – a rise of some 10% on last season, it still a weak figure by historical standards.

Australia's annual shipments topped 4m tonnes for most of the 1994-2005 period, when sugar production often exceeded 5m tonnes.

Still, even downbeat industry group Canegrowers is expecting better times next season.

"There is a light at the end of the tunnel with most regions reporting favourable weather conditions, which have allowed planting activities to be undertaken in earnest," it said.

"The 2012 crop, weather notwithstanding, is looking positive."

source: agrimoney

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