Drought-Hit Thai Sugar Sector ‘Relieved’ by Return of Rainfall

(Bloomberg) --

The return of wet weather to parts of sugar cane-growing areas in Thailand is easing the stress on drought-hit crop, brightening prospects for a bigger harvest next season in the world's second-largest exporter.

Some regions have received as much as 20% more rainfall so far this year than a year earlier, said Sirivuthi Siamphakdee, vice chairman of the Thai Sugar Millers Corp. Heavy rains earlier this week ended a prolonged dry spell, he said.

While back-to-back droughts may shrink Thailand's sugar production in the season starting October to the lowest in more than a decade, the change in weather may limit crop losses and help improve planting in the coming season. White-sugar premium fell to the lowest in more than two-weeks on Wednesday on speculation beneficial rains will boost supply outlook.

“We felt relieved by the rainfall,” Sirivuthi said in an interview on Thursday. “Now we wait and see whether the rain would make canes grow faster.”

Drought-Hit Thai Sugar Crop Seen at Lowest in More Than a Decade

The group plans to release its estimate of cane and sugar output for the 2020-21 crushing season in late September, Sirivuthi said. In May, it forecast both cane and sugar output to be less than or equal to that of the 2019-20 season, when sugar output fell to 8.27 million tons and cane output to 74.89 million tons, a plunge of more than 40% from a year earlier.

More rain is in store for Thailand through August and September with the overall precipitation expected to be more than last year, according to the Thai Meteorological Department. Showers may begin to ease in the north and the main cane-growing northeastern region from October, it said. While the total rainfall this year is expected to be better than last year, it will still be below the nation's 30-year average, the agency said.

“Although there's good news with the rain, the long period of drought had already destroyed some crops,” Sirivuthi said. “We keep our fingers crossed for more cane this coming season.”

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