Sucre Ethique - Thailand : Sugar rush worries ethanol and alcohol producers

Bangkok Post - jeudi 25 juin 2009

Local farmers should benefit from the surge in global sugar prices, which have reached a three-year high on lower production by major exporting countries. But industries including ethanol, farm feed and alcoholic beverages risk seeing higher costs of raw materials, according to Surat Phadachawasakul, general manager of Thailand Cane and Sugar Corporation (TCSC).

TCSC, the state body that oversees sugar exports, said sugar futures contracts in New York were trading as high as 17.99 US cents per pound on Tuesday.

’’This is a three-year high because of a shortfall of yearly production to meet global demand,’’ said Mr Surat. ’’Another factor is business sentiment on commodities rising with the global economy.’’

He said that dry weather in India, the world’s biggest cane producer, had reduced output, turning it into a net importer from a net exporter.

Lower production from China and some European countries has also contributed to a decline in global output for the 2008-09 season to 156.63 million tonnes, 6.3% short of demand estimated at 164.4 million tonnes.

With the International Sugar Organization forecasting short supplies through the 2009-10 season, many analysts expect prices to keep rising to benefit Thai cane farmers in the year ahead.

’’If this scenario continues for years ahead, the cheap-price cycle will return as farmers boost output to grow sugar in excess of demand,’’ said Veerasak Kwanmuang, director of the Office of the Cane and Sugar Fund.

He also said the rise in global sugar prices reflected an improving world economy, which would drive more demand for alternative fuels.

Thai Ethanol Association president Sirivuthi Siamphakdee said that as more motorists shift to gasohol, demand for molasses will rise even though ethanol can also be made from cassava. Only five of 17 local producers use cassava, one-third of local ethanol capacity.

Shares of Khon Kaen Sugar Plc (KSL), the country’s largest listed sugar miller, rose the most in three weeks yesterday in line with high global prices. KSL closed up 6.5% on the Stock Exchange of Thailand at 9.90 baht, in trade worth 26 million baht.