Sugarcane Fetching Higher Income, Post-Harvest Prices Rising (Business Brief No.2526)

The global prices of refined sugar have exhibited steadily increases rising to USD.144/lb. in April 2009, from USD.123/lb. in December 2008. Meanwhile, sugar futures in the remaining of the year will move in the range of USD.160/lb. to USD.165/lb.

As a result, it is expected that sugarcane growers may earn higher income than during the 2008/09 harvest season, because the price was set at THB830/ton on a sweetness content of 10 CCS. The 2009 year-end price would tentatively be THB920/ton at 10 CCS., and could get as high as THB1,000/ton if Thai sugarcane reaches 12.3 CCS, as it nominally achieved in the last harvest. It is expected that Thai sugarcane farmers could earn an additional THB11.3 billion on top of income earned from off-season harvest. However, several factors must be monitored closely, including unfavorable exchange rates on the Baht that may undermine the export value.

Skyrocketing sugar prices will also induce growers to maintain sugarcane stems for new cultivation. It is expected that the country's sugarcane cultivation will increase, because farmers who grow other cash crops such as cassava may switch to sugarcane, instead. Significantly, the world's major sugar producers will likely increase their production to cash in on rising prices. These important factors will likely affect sugar and sugarcane prices in the world market.