Thailand Cuts Sugar Output F'cast to 7.0 Mln Tonnes

Thailand, the world's second biggest sugar exporter, on Monday revised down its forecast of sugar production from the current 2009/10 crop to 7 million tonnes from the 7.25 million tonnes estimated in January.

It was the second downard revision. In its first forecast in August 2009, it had expected output of around 7.6 million tonnes.

"We have a bumper cane crop, but the problem is the sugar content in the cane was quite low, resulting in lower sugar yield," Prasert Tapaneeyangkul, secretary general of the state-run Office of Cane and Sugar Board (OCSB), told Reuters.

The scaled-down forecast could add to upward pressure on world sugar prices, traders said.

Strong demand recently pushed New York raw sugar futures to a 29-year high, breaking above the psychological 30-cents level in mid-January. The contract for March delivery finished at 26.80 cents per lb on Friday.

However, some analysts were cautious about the effect of the forecast drop in Thai production, saying that a bumper crop in Brazil, the world's biggest exporter, could offset it.

"It's certainly something worth noting. We also have seen and heard continued reports that the sector in Brazil is well-supplied at the moment. I think the market is just a little bit cautious at the moment," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in Sydney.

Prasert said 60 percent of around 69 million tonnes of cane from the 2009/10 crop had been crushed since the crushing season started in late November.

"Crushing should end in early April, a bit earlier than expected," he said. The season usually finishes in late April.

In the previous 2008/09 crop, Thailand produced 7.14 million tonnes of sugar, of which 2.0 million tonnes was set aside for domestic consumption, leaving abundant sugar for export in 2009.

Thai 2009 sugar exports rose 3.95 percent from 2008 to a record high of 5.1 million tonnes after India became a net importer because of drought, industry officials said.

The International Sugar Organisation (ISO) has increased its forecast for the global sugar deficit in 2009/10 to 9.4 million tonnes from 7.2 million.

source: flex-news