Sugar prices jump as land converts to food

From The Land

WITH global raw sugar prices forecast to continue an upward trend on the back of what’s shaping up to be an international crop deficit of six million tonnes this financial year, interest in putting additional NSW northern coastal land under cane is growing.

World market raw sugar prices have traded between US12.5 and US14 cents a pound during the past four weeks, and analysts say ongoing reductions in crop predictions from key production countries, India and Brazil, is setting the scene for solid returns for Australian cane growers for the next two to three years.

While prices have not yet hit the dizzying US17.5c/lb heights of a short period less than three years ago, they are a long way from the bottoms of US4c/lb to US6c/lb cane growers suffered for the first half of this decade.

India has revised its 2008-09 production to 16 to 16.5 million tonnes, compared to the 26.5m produced last financial year, on the back of favourable soybean, rice and wheat prices and monsoonal conditions, Rabobank commodities analyst, Adam Tomlinson, Sydney, said.

And while sugar is offering better returns than ethanol in Brazil, there is a limit to how much of the South American country’s cane crop can be used to make sugar, Mr Tomlinson said.

Brazil has also been hard hit by the economic downturn, with expansion dampened by a lack of available credit and reports existing mills are even struggling to open for this season’s crush.

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