Next few weeks will be crucial for Aussie sugar crop after cyclone

30.03.2017

Although it will take several days to assess the extent of cyclone damage in Australia's sugar belt, the situation could worsen if weather conditions do not support recovery, investors and industry bodies warned.

"Cyclone Debbie crashed, very slowly, into Australia's sugar coast yesterday," said Tobin Gorey, at Commonwealth Bank of Australia.

"How this will affect Queensland's sugar production will remain uncertain for a while as people in the region attend to more important things."

"Some cane will obviously be damaged to an extent that it will not recover," Mr Gorey said.  "Much more cane though may or may not recover from lodging or extremely wet conditions."

"The outcome may not be evident for weeks."

Key Mackay and Prosperine regions hit

"The Australian sugar industry body industry body Canegrowers said that the Mackay and Prosperine regions had been worst affected.

"Last year the Mackay and Proserpine regions produced 8.5m tonnes of sugarcane, out of a statewide harvest of 35.0m tonnes," Canegrowers boss Dan Galligan said.

"They have taken a beating from Cyclone Debbie and obviously their yields will be affected for the 2017 harvest due to start in less than three months."

"The full extent of the damage to farms and the crop won't be clear for a number of days," Mr Galligan said.

"It has still been raining heavily this morning in some of the affected areas and flooding is occurring."

No price support so far

Raw sugar markets in New York have got not support from the news, although some ascribed the attempted rally of the previous day to concerns over the hurricane.

"There seemed no justification for the rise… although potential damage to cane in Queensland caused by cyclone Debbie was talked about," said Nick Penney, at Sucden Financial.

"The cyclone was subsequently downgraded to a tropical storm and whilst much cane was flattened, damage assessment will take time."

May raw sugar futures were down 3.1% on the day in mid-day deals, as prices tested recent lows at 17.02 cents a pound.


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