COFCO executive does not see recovery in Thailand sugar crop soon

DUBAI (Reuters) - Chinese commodities trader COFCO [CNCOF.UL] said on Monday it did not predict a recovery in Thailand’s sugar crop any time soon.

FILE PHOTO: People stand outside the headquarters of China Oil and Foodstuffs Corporation (COFCO) in Beijing, China, November 3, 2016. REUTERS/Thomas Peter/File Photo

COFCO’s Managing Director Softs Marcelo de Andrade made his comments during a panel discussion at an industry conference in Dubai.

Thailand’s sugar production in the 2019/20 crop year is likely to fall 28% from a year earlier to a nine-year low of 10.5 million tonnes, as drought curtails cane supplies.

The lower production is expected to limit exports from the world’s second-biggest exporter and support global prices.

Sugar trader Alvean also said it was too early to tell if the Thai crop would recover in the 2020-2021 season.

“The planting season in some regions has passed and the lack of water has affected some of those plantings,” Mauro Angelo Chief Commercial Officer at Alvean told Reuters on the sidelines of the conference.

“If it recovers it won’t be very much,” he said.

Poor crops in the European Union, Thailand, India and the United States have helped to tighten supplies, with the global market widely forecast to be in deficit in 2019/20.

The head of sugar at Louis Dreyfus [LOUDR.UL] said the market needed more Brazilian production and prices would remain elevated, after tight supplies drove them to a two-year peak.

“I do think that we need more production from Brazil and that means higher prices even with the current energy price,” Enrico Biancheri said.

Brazil, the world’s largest exporter of sugar and the second-largest producer, is expected to produce more sugar as prices rise making it more attractive against the production of ethanol.

Getting that production number right is going to be key for the sugar market and pricing, Martin Todd, Managing Director of LMC International said.

“What signal will the market send in terms of premium of sugar over ethanol pricing. Brazil can produce more sugar than it has been and there is a risk it could over produce,” he told the panel.

Reporting By Maha El Dahan and Nafisa Eltahir; Editing by Christian Schmollinger and Louise Heavens