Thai Sugar Exports to Surge to Record on Increasing Production

(Bloomberg) – Sugar shipments from Thailand, the world’s largest exporter after Brazil, will probably climb 15 percent to a record next year as increased plantings boost output, the Office of the Cane and Sugar Board said.

Exports will reach 8.5 million metric tons in 2014 from an estimated 7.4 million ton this year, said Somsak Suwattiga, secretary general of the state-run board. Production will expand 10 percent to an all-time high of 11 million tons in the crushing season starting Nov. 15 from the highest ever cane harvest of 110 million tons, he said.

Expanding Thai supplies will add to a global glut and potentially curb a 16 percent rally in futures in New York since tumbling to a three-year low in July. Global surplus will be 4.66 million tons in the 2013-2014 season as rising Asian output will more than compensate for a decline in Brazil’s main growing region, according to Green Pool Commodity Specialists Pty.

“If we didn’t have an increase from Thailand, we could have had a smaller surplus,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said by phone today.

Thailand and India could become “aggressive exporters” early next year on the back of weakened domestic currencies, Macquarie said in a report dated Oct. 4. Global surplus may narrow to 3.2 million tons in the 2013-2014 season, from 10.6 million tons, as Asian buyers build up stockpiles while beet growers cut production, responding to weak prices, it said.

Raw sugar for delivery in March gained 0.3 percent to 18.54 cents on ICE Futures U.S. at 5:56 p.m. in Singapore, down 4.9 percent this year for the most-active contract. A third annual decline this year will be the longest slump since 1992.

Crop Switching

“Production will increase as cane plantation expands with rice farmers switching to sugar cane,” Somsak said in a phone interview today. “Production will rise further next year as domestic demand also continues to rise.”

Thai government is encouraging farmers to switch from growing rice to sugar cane for better returns. Of the total rice land of 73.4 million rai (11.7 million hectares), 6.7 million rai are suitable for cane, Thai Sugar Millers Corp. said in a statement, citing an estimate from the Farm Ministry.

Thai millers plan to increase cane plantation areas by 7.2 million rai over the next three years in line with the government plan, the group representing the country’s 50 mills, said. Thailand has 9.33 million rai under sugar cane in the current season, the group said.