Sydney, Nov. 14 - Australian sugar exports, now about half-completed for 2007/08, will be less than earlier forecast after wet weather delayed the start of the crushing season, top exporter Queensland Sugar Ltd told Reuters.
Exports would be less than the 3.7 million tonnes recently forecast by government unit the Australian Bureau of Agricultural and Resource Economics, Paul Heagney, executive manager sugar marketing for Queensland Sugar, said.
"Our exports will be less than that. We don't really know until all the mills are finished," he said.
As Australia's sugar industry continues to struggle with adverse weather, exports will also be down on the 3.7 million tonnes of 2006/07, when Cyclone Larry flattened a large part of the cane in Australia's sugar heartland in north Queensland.
Exports were 4.1 million tonnes the previous year, a more normal level.
Australia is also heading for lower sugar production of 4.4-4.6 million tonnes this year, down from 4.7 million tonnes in 2006/07.
Typical production is over 5 million tonnes, and this year's crop appears to be ushering in a period of declining production for the country as the strong Australian dollar and weak world prices pressure margins.
Ian Ballantyne, head of the Canegrowers organisation, recently told Reuters that Australian production was expected to fall by around 10 percent over the next two years. This would cut around 500,000 tonnes from production which would end up at around 4 million tonnes.
ASIAN FOCUS
"We're very well sold in the context of what we expect to harvest at the moment," Heagney said.
With supplies tight, Queensland Sugar is focusing exports into traditional main markets in East Asia even more than usual, Heagney said.
Despite premium prices in Asia because of a regional deficit, which stands in sharp contrast with the surplus in the rest of the world, export returns are slim with the Australian dollar around 23-year highs and world sugar prices around half the 20-year highs of 19 cents in early 2006.
Ballantyne recently said that no one in the Australian industry would be making money at present world sugar prices.
Heagney said on Wednesday that it was hard to say precisely whether Australian sugar exports were profitable.
"The current high Australian dollar is putting pressure on returns to the Australian industry," he said.
John King, general manager of Tully mill, was recently quoted by the Cairns Post newspaper as saying: "A combination of low sugar prices and a low crop this year means that financial returns for the industry are not good". Five of Queensland's 23 operating mills have now finished crushing, with the rest to finish by around mid-December.