It’s being hailed as a “once in a generation” sugar price, recently topping $827 /tonne.
This couples with an easing in fertiliser prices, setting the stage for a promising, prosperous 2023 harvest.
During my time as a grower, I have not seen our sugar industry in such a strong position.
Sugar prices have remained strong now for well over a year, but especially the past three months. Recently we saw the July '23 contract close near the 25 cents/pound bringing a very lucrative, $800/tonne IPS sugar. Sounds great on paper, but a little too late for most Australian growers to secure.
It is looking good - for the short-to-medium term - for prices to maybe even strengthen further, with a 2 million tonne deficit in world supplies.
There are a few factors in world sugar supply that mean the shortfall is going to be difficult to meet: we are seeing the fundamentals around world sugar supply supporting strengthening of the sugar price, in what seems is referred to as a bullish market.
A strong indicator of further sustained prices is that our competitors have not taken up the high price opportunity and begun expanding their production. These decisions - I believe - are based on world economic and financial difficulties and the instability of the US banking sector.
Many sugar-producing countries are experiencing limiting factors in their supply chain.
At this stage, we have Brazil which has had a good wet season with a crop of around 590 million tonnes of cane. Brazil’s problem lies in their ability to get their sugar through their two main ports. The Brazilian sugar industry competes with other commodities for shipping infrastructure. For this season at least, Brazil is behind the eight-ball competing for the use of port facilities with a larger-than-normal corn and soybean crop.
India has a crop of 33.1 million tonnes of sugar and has not made any announcement about their intentions to export anything beyond the initial 6 million tonnes. This is leaving an air of uncertainty around supplies out of India. India has also, since the world trade organisation’s decision on the dumping of subsidised sugar on the world market, now made a significant move towards ethanol production taking away from excess production for export.
The Thai crop is being revised down around 11 million tonnes because of mills finishing sooner than expected.
Taking all of that as it is, we have our own strong points that should go further towards our own bright future.
After a good wet season, we are now looking at another good crop, with Mackay Sugar's preliminary estimate of 5.57 million tonnes and Plane Creek hoping for 1.5 million tonnes. Our Achilles heel will again be our ability to remove and process the crop in a reasonable timeframe.
The local sugar industry is further buoyed by the potential for the development of value-added products derived from our sugar. As we have heard time and again, the Australian sugar industry has stepped up to the plate, with our sustainability credentials making us very attractive for investment in further development of renewables in aviation fuels and plant-based protein from our sugar production.
The spate of interest in the Mackay sugar industry from Australian and overseas companies in Australian sugar, instigated by a hunger by consumers around the world for sustainable food and fuel, is further driven by our stability in production and in capacity to deliver to market.
To add to that, we are fortunate to have a State Government that is hell-bent on supporting the production of these products and have been very active in speaking with industry and investors as to where our opportunities lie.
We need to be part of any developments to be able to take advantage of them in the future. To not be involved leaves us sitting out on a limb with no chance of progress being made.
A tightening of world sugar supply is keeping sugar prices high. The stability of Australian production and export capacity makes us well-placed to reap the benefits. Photo: Contributed
