Sugar Semi-annual

An Expert's View about Food , Beverages and Tobacco in Thailand

Posted on: 13 Oct 2011

TH1123 MY 2011/12 sugar production is revised up to a record 10.2 million tons, up 5.2 percent from the previous year’s bumper sugarcane crop of 90 – 100 million tons due to better-than-expected average yield resulting from favorable weather conditions. Consequently, sugar exports are forecast to increase to a record 8.7 million tons in MY2011/12.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 9/27/2011 GAIN Report Number: TH1123 Thailand Sugar Semi-annual 2011 Approved By: Orestes Vasquez Agricultural Attaché Prepared By: Ponnarong Prasertsri Agricultural Specialist Report Highlights: TH1123 MY 2011/12 sugar production is revised up to a record 10.2 million tons, up 5.2 percent from the previous year?s bumper sugarcane crop of 90 ? 100 million tons due to better-than-expected average yield resulting from favorable weather conditions. Consequently, sugar exports are forecast to increase to a record 8.7 million tons in MY2011/12. Executive Summary: MY 2011/12 sugar production is revised up to a record 10.2 million tons, up 5.2 percent from the previous year?s bumper sugarcane crop of 90 ? 100 million tons due to better-than-expected average yield resulting from a favorable monsoon season. In addition, the flooding damage will likely be marginal as sugarcane crop is cultivated upland. However, sugar consumption is revised down to 2.3 and 2.4 million tons in MY2010/11 and MY2011/12 in anticipation of a slowdown in the Thai economy. Consequently, sugar exports are forecast to increase to a record 7.4 million tons in MY2010/11 and 8.7 million tons in MY2011/12. This export momentum will likely continue in MY2012/13 as three new sugar facilities are expected to initiate operations and increase the country?s total milling capacity to approximately 1.0 million tons/day, as compared to the existing 47 mills with milling capacity of 0.9 million tons/day. Commodities: Sugar Cane for Centrifugal Sugar, Centrifugal Production: According to the official MY2010/11 crushing report by the Office of Cane and Sugar Board (OCBD), sugarcane production is revised up to 95.7 million tons, up 38.7 percent from the previous year, due to better-than-expected average yield of12.2 tons/rai (76.56 tons/hectare), up 16.0 percent from the previous year driven by a prolonged rainfall season that ended a month before the harvest. Consequently, sugar production increased to a record 9.7 million tons, up 39.4 percent from the previous year. MY2011/12 sugarcane production is revised up to 100.0 million tons, up 4.4 percent from the previous year in anticipation of an average yield improvement following a favorable monsoon season. Despite the government?s report of critical flooding in the lower northern and central plain areas of 5.1 million rai (0.8 million hectares) during August ? September 2011, the Office of Cane and Sugar Board (OCSB) expects a marginal impact on MY2011/12 sugarcane crop as most sugarcane crop is cultivated upland. The damaged areas are estimated at around 30,000 rai (4,800 hectares), which account for 0.4 percent of the total cultivated area (Figure 1 and 2). Meanwhile, above-normal precipitation will likely improve the average sugarcane yield to 12.3 tons/rai (76.92 tons/hectare), up 0.5 percent from the previous year. In addition, the extraction rate of sugarcane for sugar is expected to increase to 104.0 kg/ton of cane in MY2011/12, as compared to 101.3 kg/ton of cane in the previous year when rainfall was prolonged due to the La Nina phenomenon. Presently, the probability for La Nina remains low during the harvesting period in November 2011 ? April 2012. Consequently, sugar production is revised up to 10.2 million tons, up 5.2 percent from the previous year. Consumption:MY2010/11 ? MY 2011/12sugar consumption is revised down to 2.3 million tons and 2.4 million tons, respectively, due to a slowdown in economic growth. MY2010/11 sugar consumption is lower than expected. In the first half of 2011, total sugar consumption increased only 2.3 percent, far behind the expected annual growth rate of 13.0 percent in the previous forecast, due to lower-than- expected sugar demand in the beverage industry. Overall demand in the beverage industry declined 0.2 percent from the previous year following a drop in non-alcoholic beverage consumption due to the unusual lower-than-normal summer temperatures caused by La Nina phenomenon earlier this year. The beverage industry accounts for 45.0 percent of total sugar consumption in the industrial sector. In addition, economic activity will likely slowdown in the second half of the year due to the flooding during August ? October, and as the global economy slows down in the second half of the year which will extend thorough next year. The latest International Monetary Fund (IMF) forecast has revised global economic growth down from 4.3 to 4.0 percent in 2011, and from 4.5 to 4.0 percent in 2012. Trade: MY2010/11 and MY2011/12 sugar exports are revised up to 7.4 million tons and 8.7 million tons, respectively, in anticipation of larger supplies of sugar from bumper sugarcane crops. During January ? June 2011, total sugar exports increased to 4.2 million tons (raw value), up 21.9 percent from the previous year. The increase reflects a surge in raw sugar exports, which nearly doubled from the previous year, particularly to Japan, South Korea, Malaysia, and Russia due to limited exportable supplies from Australia and Brazil caused by unfavorable weather conditions. In addition, Thailand will be able to fulfill the FY2012 U.S. tariff quota (TRQ) of raw cane sugar of 15,027 tons (raw value) and has offered to supply an additional 100,000 metric tons (raw value) if a quota reallocation or addition is implemented. MY2010/11 imports will likely increase to 13,000 tons, close to the TRQ level of 13,760 tons committed to the WTO, due to a sugar shortage panic resulting from rumors of tight supplies at the beginning of the year. However, in MY2011/12 sugar imports are forecast to decline to marginal levels in anticipation of significant increases in domestic supplies. Stocks: MY2010/11 sugar stocks are revised up slightly to 2.3 million due to the slowdown in consumption. Meanwhile, MY2011/12 sugar stocks are revised down in anticipation of an increase in exports. Policy: The Government will likely maintain its price control policy on sugar set on May 1, 2008 at 19 baht/kg ($29 cent/lb) for refined sugar, ex factory wholesale (excluding 7 percent Value Added Tax). The retail price (include Value Added Tax) are set at 21.85 baht/kg ($33 cent/lb) for white sugar, and 22.85 baht/kg ($35 cent/lb) for refined sugar. The government will receive revenue from the Value-Added Tax collected on domestic sales of sugar, which will be used for the state-run Cane and Sugar Fund?s debt repayment to the Bank for Agriculture and Agricultural Cooperatives (BAAC) from the price support program. According to the government, from the 3.0 billion baht ($100 million) three year soft loan approved on September 7, 2010 for cane growers to buy harvesters to improve their efficiency, these have applied for approximately 1.4 billion baht ($47 million) of the loan. They have purchased both new and used cane Table 1: h iland's Sugarcane Production harvesters mainly from Australia and the U.S. The U.S. harvesters account for approximately half of the market share. This will help increase harvest efficiency in order to fulfill the increasing demand Sugar Ca e for from the additional new sugar facilities from the existing 47 mills with milling capacity of 0.9 million 2009/ 2010 2010/ 2011 2011/ 2012 Centrifugal Thailand tons/day to 50 mills with capacity of approximately 1.0 million tons/day in MY2012/13. As for import policy, despite the applied tariff rate of 3.5 baht/kg ($5.29 cent/lb), the government import M ark et Year Begin: D ec 2009 M ark et Year Begin: D ec 2010 Market Year Begin: Dec 2011 unit policy adheres to its WTO commitments of a 65 percent tariff rate under a quota of 13,760 tons. Meanwhile, the U SD A Of f ic ia l N ew Pos t U SD A Of f ic ia l N ew Pos t U SD A Of f ic ia l N ew Pos t out-of-quota tariff is 94 percent. ProAductiorn,e Suppaly and DPemand Data Statistics: l n ed 1,055 1,050 1,090 1,250 1,300 (1000 HA) Area Harvested 1,035 1,030 1,070 1,200 1,280 (1000 HA) Production 68,700 69,000 68,300 95,700 100,000 (1000 MT) Total Supply 68,700 69,000 68,300 95,700 100,000 (1000 MT) Utilization for Sugar 68,500 68,800 68,000 95,400 99,700 (1000 MT) Utilizatn for Alcohol 200 200 300 300 300 (1000 MT) Total Utilization 68,700 69,000 68,300 95,700 100,000 (1000 MT) Table 2: Thailand's Sugar Production, Supply and Demand Sugar, Centrifugal 2009/ 2010 2010/ 2011 2011/ 2012 Thailand M ark et Year Begin: D ec 2009 M ark et Year Begin: D ec 2010 M ark et Year Begin: D ec 2011 unit U SD A Of f ic ia l N ew Pos t U SD A Of f ic ia l N ew Pos t U SD A Of f ic ia l N ew Pos t Beginning Stocks 2,556 2,556 2,343 2,343 2,103 2,319 (1000 MT) Beet Sugar Production 0 0 0 0 0 (1000 MT) Cane Sugar Production 6,930 6,930 9,160 9,663 9,700 10,170 (1000 MT) Toable 4: Thailand's Total Exports of Sugartal Sugar Production 6,930 6,930 9,160 9,663 9,700 10,170 (1000 MT) Raw Imports 0 0 0 0 0 0 (1000 MT) Unit: Metric tons (raw value) Refined Imp.(Raw Val) 7 7 0 13 0 0 (1000 MT) 2007 2008 2009 2010 Jan. - Jun. % change Total Imports 7 7 0 13 0 0 (1000 MT) 201 20 1 Total Supply 9,493 9,493 11,503 12,019 11,803 12,489 (1000 MT) URaw Exports 2,120 2,120 3,500 4,400 3,800 4,900 (1000 MT) .S. 21,318 12,259 14,095 22,868 1 5,686 1 5,909 1.4 Refined Exp.(Raw Val) 2,810 2,810 3,400 3,000 3,500 3,800 (1000 MT) Indonesia 1,423,461 1,665,828 1,004,884 1,304,964 1 ,163,024 9 41,256 -19.1 Total Exports 4,930 4,930 6,900 7,400 7,300 8,700 (1000 MT) able 3: Thailand's Sugar and Molasses Yield and Prices Japan 560,483 916,460 724,676 533,903 2 75,955 6 10,955 121.4 Human Dom. Consumption 2,220 2,220 2,500 2,300 2,800 2,400 (1000 MT) MY 2009/2010 MY 2010/2011 MY 2011/2012 COthienra Disappearanc e 2 2 0 , 503 121,830 195,1410 25,511 0 1 4,766 0 1 74,234 0 1080.0 0 (1000 MT) (Estimate) (Forecast) M Total Use 2,220 2,220 2,500 2,300 2,800 2,400 (1000 MT) Yiaellady spiaer metric t 2o1n4 o,6f 6c9ane 67,09 52,778 156,234 1 35,110 2 81,876 108.6 Ending Stocks 2,343 2,343 2,103 2,319 1,703 1,389 (1000 MT) Su ar (kg.) 101.17 101.33 104.00 South Korea 52,463 263,672 151,418 134,804 1 13,186 3 70,323 227.2 ToMtal oDlaistribution 9,493 9,493 11,503 12,019 11,803 12,489 (1000 MT) sses (kg.) 43.48 44.4 43.00 CF mbodia 217,013 299,141 493,914 468,756 2 94,756 1 75,812 -40.4arm price (ex-factory): Baht/ton 1,000 1,000 - 1,200 1,000 Wholesale prices Taiwan 83,381 431,978 298,451 88,042 5 3,719 1 26,983 136.4 Sugar (Baht/100 kg.) 2,033 2,033 2 ,033 Russia 53,711 141,706 30,661 31,652 3 1,652 1 33,928 323.1 Molasses (Baht/ton) 4,100 4,000 3 ,800 Singapore 219,554 112,144 135,280 109,138 6 9,067 8 6,491 25.2 India - - 327,560 349,268 3 41,815 3 ,206 -99.1 Other 1,608,782 1,016,629 1,868,754 1,393,108 9 78,489 1 ,296,636 32.5 Total 4,675,338 5,048,737 5,297,612 4,618,248 3 ,487,225 4 ,217,609 20.9 Source: Office of Cane and Sugar Board Table 6: Thailand's Exports of White and Refined Sugar (MTRV) Destination 2006 2007 2008 2009 2010 Jan. - Jun. % change 2010 2011 Bangladesh 1 16,967 1 6,846 5 35 98,160 2,140 2,140 - - Brunei 5,033 5 ,707 6 ,247 11,775 6,337 3,146 3,281 4.3 Burma 5,711 3 ,691 3 ,913 5,493 13,086 5,158 14,825 187.4 Cambodia 257,147 2 17,013 2 99,141 486,352 468,756 297,756 175,812 -41.0 China 8,780 6 0,211 1 01,310 80,054 20,894 14,766 39,494 167.5 India - - - 327,560 348,499 341,046 3,206 -99.1 Indonesia 115,279 6 86,712 5 71,649 150,711 522,883 507,036 85,389 -83.2 Iran 1 7,816 2 52,621 4 5,138 6 ,993 - - 4 ,013 - Jordan 1 7,687 4 5,143 1 ,231 17,174 27 - 10,165 - North Korea 32,085 1 7,246 6 2,786 2,467 5,230 5,230 4,140 -20.8 Table 5: Thailand's Exports of Raw Sugar (MTRV) South Korea 793 1 ,244 1 7,126 9,830 544 223 13,664 6,027.4 Destination 2006 2007 2008 2009 2010 Jan. - Jun. % Change Kenya 1,252 8 ,710 2 ,181 2 1,438 5 ,566 2 ,969 1 ,605 -45.9 2010 2011 Laos 51,122 2 6,376 4 8,318 63,915 31,987 11,984 11,146 -7.0 China 2 21,503 160,292 20,520 115,086 4,617 - 134,739 - Malaysia 12,136 1, 06 4 0,158 28,030 35,85 18,351 1 , 1 -13.6 Indonesia 1 96,017 736,749 1,094,179 854,174 782,081 655,988 855,867 30.5 Japan 5 43,908 557,482 916,460 724,660 533,887 275,939 610,938 121.4 Maldives 1 ,035 - 7 49 1,418 776 321 482 50.2 North Korea - - - 4 1,450 2 0,273 7 ,182 9 ,496 32.2 Pakistan 1 8,138 3 ,570 1 5,856 148,734 178,485 129,693 1,819 -98.6 South Korea 3 8,376 4 8,316 2 46,516 1 41,589 1 34,261 1 12,963 3 56,659 215.7 PMhalaysia 3 1,190 1 82,963 2 6,933 2 4,747 1 20,375 1 16,759 2 66,016 127.8ilippines 3,606 9 5,537 103,14 8 ,982 266,813 145,538 115 174 -20.9 Philippines - 205 - - 29,365 20,920 2,822 -86.5 Russia 2 59 - 5 06 2,495 - - 776 - Russia 3 8,885 53,711 141,200 27,907 31,652 31,652 133,153 320.7 Saudi A abia 1 ,873 9, 31 25,562 35,1 8 03 8 03 13 57 1,550.9ingapore 2 21 128 1,334 1,539 7,206 1,129 2,283 102.2 Sri Lanka 4 ,361 1 4,877 1 8,771 1 2,877 8 ,824 8 ,824 4 ,104 -53.5 Singapore 29,308 2 19,426 1 10,811 35,135 101,933 67,939 84,208 23.9 Tanzania 7 70 5 4,070 6 ,618 8 ,297 1 ,539 1 ,539 2 ,334 51.7 Somalia - - - 51,750 - - - - Taiwan 5 3,282 62,059 246,061 180,675 56,367 28,060 53,282 89.9 United States 2 4,939 2 1,299 1 2,259 1 4,095 2 2,868 1 5,686 1 5,909 1.4 Sri Lanka 8 7,163 3 8, 4 2 3,063 1 40,7 8 6 8,108 5 0,622 2 0,771 -59.0 UAE - - 221 257 - - - - Syria 1 ,739 4 1,542 6 ,153 - - - 4 ,548 - Vietnam 5 1,505 1 1,126 4 1,626 2 3,598 8 1,372 2 7,702 2 3,906 -13.7 TOatnhzearsnia 1 6 , 81 9304 26 08,,414643 4 8 ,7,72275 21 20,02,59915 1 39 8,0,57417 1 3 8 3,,604636 3 228,12987 146.1656.0 UAE 2 6,568 6 4,354 5 3,498 1 00,511 2 1,645 2 1,324 3 6,532 71.3 Total 1 ,221,847 1,971,440 2,781,423 2,271,866 1,973,234 1,437,409 2,799,705 94.8 Vietnam 1 0,983 3 4,053 5 9,546 110,217 179,179 126,104 145,565 15.4 Source: Office of the Cane and Sugar Board, Ministry of Industry Yemen - 2 49,779 6 ,741 31,539 1,498 856 2,605 204.3 Others 172,249 5 54,587 6 57,226 952,893 354,896 264,914 587,439 121.7 Total 1,024,863 2 ,703,898 2 ,267,314 3,025,746 2,645,014 2,026,562 1,417,905 -30.0 Source: Office of the Cane and Sugar Board, Ministry of Industry Table 7: Thailand's Monthly Export Prices (F.O.B.) of Raw Sugar (Baht/Ton) Month 2005 2006 2007 2008 2009 2010 2011 January 6,763 10,226 9,715 8,463 9,380 12,761 15,398 February 7,984 8,991 9,812 8,457 10,741 14,685 14,700 March 8 ,318 10,495 8,915 8,398 11,480 14,028 16,589 April 8 ,291 10,409 8,807 8,594 11,123 14,865 16,078 May 8 ,848 11,385 8,391 8,491 11,655 13,865 15,832 June 8 ,558 11,871 8,238 8,758 11,803 13,558 15,731 July 8 ,699 12,315 7,645 8,917 11,649 1 3,719 N.A. August 8 ,768 12,407 8,590 9,163 11,942 1 3,890 N.A. September 8 ,832 12,599 7,909 8,949 11,162 1 3,446 N.A. October 8 ,889 11,658 7,167 9,278 11,614 1 2,695 N.A. November 8 ,746 9,963 8,189 9,469 11,361 1 2,240 N.A. December 8 ,385 11,151 8,215 9,644 12,736 1 5,034 N.A. Average 8 ,561 11,389 8,502 8,882 11,465 13,928 15,722 Avg. Exchange rates 40.22 37.88 34.52 33.31 34.29 31.69 30.51 ( Baht/U.S.$) Source: Office of the Cane and Sugar Board, Ministry of Industry Table 8: Thailand's Monthly Export Prices (F.O.B.) of Plantation White Sugar (Baht/Ton) Month 2005 2006 2007 2008 2009 2010 2011 January 9,549 10,226 11,994 10,100 10,615 17,864 17,449 February 9,923 12,471 11,498 9,254 10,832 16,952 19,827 March 1 0,063 14,286 10,738 10,104 11,232 17,684 16,006 April 1 0,251 13,396 11,042 10,085 11,609 17,418 18,932 May 1 0,357 13,673 10,722 10,818 11,651 17,069 17,995 June 1 0,443 14,898 10,470 10,239 13,239 16,489 18,257 July 1 0,929 15,016 10,251 16,789 13,446 1 6,773 N.A. August 1 1,186 13,786 10,132 10,459 13,391 1 8,100 N.A. September 1 0,806 14,496 10,202 11,762 14,077 1 8,868 N.A. October 1 1,475 13,745 9,112 11,987 14,439 1 6,826 N.A. November 1 1,399 12,859 9,616 10,855 15,211 2 2,320 N.A. December 1 1,236 15,552 9,522 11,253 15,855 2 0,077 N.A. Average 1 0,378 13,835 10,505 11,142 12,966 17,358 18,078 Avg. Exchange rates 40.22 37.88 34.52 33.31 34.29 31.69 30.51 ( Baht/U.S.$) Source: Office of the Cane and Sugar Board, Ministry of Industry Table 9: Thailand's Average Prices of Domestic Plantation White Sugar and Sugarcane Calendar Plantation White Sugar Sugarcane Year Wholesale Retail Initial Actual (Baht/100 kg.) (Baht/kg.) (Baht/metric ton) 1980 1,011 11.65 Nil 650 1981 1,019 11.51 Nil 510 1982 1,075 11.94 350 381 1983 1,091 12.00 421 421 1984 1,162 12.00 395 380 1985 1,097 12.00 330 388 1986 1,099 12.00 375 408 1987 1,097 12.00 405 462 1988 1,098 12.00 450 527 1989 1,098 12.00 460 596 1990 1,099 12.00 460 442 1991 1,099 12.00 399 480 1992 1,099 12.00 420 516 1993 1,099 12.00 490 533 1994 1,099 12.00 520 569 1995 1,099 12.00 500 538 1996 1,099 12.00 500 561 1997 1,099 12.00 600 703 1998 1,100 12.50 500 485 1999 1,100 12.50 450 478 2000 1,177 12.50 600 693 2001 1,177 13.25 530 520 2002 1,177 13.25 500 531 2003 1,177 13.25 465 504 2004 1,177 13.25 620 658 2005 1,177 13.25 800 847 2006 1,498 16.5 800 702 2007 1,498 16.5 638 672 2008 2,033 21.85 830 918 2009 2,033 21.85 965 1 ,000 2010 2,033 21.85 1 ,045 N.A. Note: * The revenue sharing system of 70:30 to cane planters and millers started in 1982/83 when the initial cane price began to be quoted. * The purchasing cane based on C.C.S. system starts in 1993/94 crushing season with the standard quality of cane at 10 C.C.S. * Average final cane price has been split into different assessments for different regions since 1996/97. * The retail price of plantation white sugar raised to 13.25 baht/kg in Jun. 2, 2000. * Wholesale prices and retail prices of plantation white sugar raised to 1,498 baht/kg and 16.50 baht/kg, respectively, on Mar. 7, 2006. * Wholesale prices and retail prices of plantation white sugar raised to 2,033 baht/kg and 21.85 baht/kg, respectively, on May 1, 2008. Source: Office of the Cane and Sugar Board, Ministry of Industry Table 10: Thailand's Sugar Utilization by Industry Unit: Metric Ton Type of Industry 2006 2007 2008 2009 2010 BEVERAGES (Exluding Alcoholic Drink) Refined Sugar 296,127 213,037 215,573 2 32,063 2 77,504 White Sugar 65,635 134,982 148,359 1 49,727 1 70,309 Sub - Total 361,762 348,019 363,932 3 81,790 4 47,813 CAKE & BREAD and Alcoholic Drink Refined Sugar 11,618 10,123 9 ,236 3,987 1,031 White Sugar 9 ,624 12,695 13,955 10,981 14,028 Sub - Total 21,242 22,818 23,191 14,968 15,059 FRUIT & FOOD PRODUCTS Refined Sugar 146,172 80,250 67,099 68,584 1 03,300 White Sugar 134,755 129,500 127,951 1 19,451 1 55,598 Sub - Total 280,927 209,750 195,050 1 88,035 2 58,898 DAIRY PRODUCTS Refined Sugar 48,666 28,110 33,985 35,857 51,056 White Sugar 92,698 116,905 116,544 1 29,472 1 45,697 Sub - Total 141,364 145,015 150,529 1 65,329 1 96,753 CONFECTIONARY PRODUCTS Refined Sugar 8 ,811 7 ,760 6 ,095 7,169 7,178 White Sugar 22,769 15,619 15,882 54,104 25,806 Sub - Total 31,580 23,379 21,977 61,273 32,984 PHARMACEUTICAL PRODUCTS & MISCELLANEOUS Refined Sugar 18,759 15,485 8 ,018 17,353 20,981 White Sugar 1 ,994 568 916 3,309 3,041 Sub - Total 20,753 16,053 8 ,934 20,662 24,022 Source: Production and Distribution Administration Center, Office of Cane and Sugar Board End of Report
Posted: 13 October 2011

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