(Adds detail, further comments)
By Michael Byrnes
SYDNEY, Nov 1 (Reuters) - Australian raw sugar production is
set to fall by a further 10 percent over the next two years due
to a flood of Indian exports, low world prices and the high
Australian dollar, industry body Canegrowers said on Thursday.
Low-priced Indian sugar exports were penetrating east Asian
markets, including China and Indonesia, and replacing some
Australian tonnages, Canegrowers chief Ian Ballantyne told
Reuters in an interview.
"I think in the next two years or so we'll see probably
another 10 percent of (Australian) growers leave this industry
and I think we'll see contraction of sugar production maybe of up
to that order too," Ballantyne said. He said Australia's sugar production this season, with the
harvest to be completed around Christmas, could total between 4.4
million tonnes and 4.6 million tonnes, down from 4.7 million
tonnes in 2006/07.
This followed a late start to the crushing season because of
heavy unseasonal rain.
The exact figure would depend on monsoonal rains in December,
which could interfere with the end of the crushing season and
cause up to 1.5 million tonnes of cane to be left in the fields,
reducing production by more than 200,000 tonnes.
A 10 percent fall in production of raw sugar over the next
two years would reduce Australian output by about 500,000 tonnes,
cutting production to around 4 million tonnes.
Ballantyne said production would definitely fall in 2008/09,
because of low prices and low returns which have convinced
farmers not to replant some parts of their fields.
"Any late harvest/finish means that next year's crop is
always poorer," he said, pointing out that cane needs time to
re-generate.
"Australian dollar returns and the late finish to the season
will both mitigate against any crop recovery at all," he said.
Ballantyne said it was too early to say how much next year's
crop would fall.
"But I am absolutely calling it down, irrespective of weather
conditions," he said.
Australian cane farmers were switching to other crops, but
could move back into sugar if returns improved, he said.
Australian raw sugar production has already fallen in recent
years from 5 million tonnes or more because of weather problems
and poor world prices.
Ballantyne said low world sugar prices and the impact of the
Australian dollar, currently at 23-year highs against the U.S.
dollar, would cut average returns to Australia's remaining 4,200
sugarcane growers to about A$265-A$275 a tonne, down from A$370 a
tonne last year.
A strong Australian dollar means growers get less when they
transfer their U.S. dollar earnings back into the local currency.
"I don't believe any company in Australia involved in sugar
cane or sugar milling will be in the black this year," Ballantyne
said.
Australia's biggest sugar company is CSR Ltd <CSR.AX>.
((Reporting by Michael Byrnes, editing by Richard Pullin;
[email protected]; Reuters Messaging:
[email protected]; +61-2-9373 1825))
Keywords: AUSTRALIA SUGAR/