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Thailand's sugar output to hit nine-year low due to drought - trade body

PUNE, India (Reuters) - Thailand’s sugar production is likely to fall 28% year-on-year in 2019/20 to a nine-year low of 10.5 million tonnes as drought curtails cane supplies, the head of a leading trade body told Reuters on Friday.

Bags of sugar are on display at a supermarket in Bangkok, Thailand, January 22, 2019. Picture taken January 22, 2019. REUTERS/Athit Perawongmetha/Files

The lower production will limit exports from the world’s second-biggest exporter and support global prices which are trading near their highest level in 2-1/2 years.

Thailand could export between 6 and 7 million tonnes of sugar in the current year, down from 11 million a year ago, Rangsit Hiangrat, director general at Thai Sugar Millers Corp., said.

“Drought has badly affected cane plantations. It will have a negative impact on production this year and next year,” he said.

Thailand’s sugar production in the next marketing year starting in October 2020 could fall below 10 million tonnes, he said.

Thailand’s dry season started in November and usually lasts through April, although this year authorities say it could go on through June. A drought has been declared in 14 provinces in the central, northern and northeastern farming regions.

With reservoir levels low, the government has also asked farmers in some provinces near the Chao Phraya River basin not to grow off-season rice.

Thai sugar mills usually crush cane until early May, but this year they could stop crushing in early March due to limited supplies of cane, Hiangrat said.

Like Thailand, India’s sugar production could fall nearly 18% in 2019/20 as a drought followed by floods is expected to curtail output in the country’s second-biggest producing state, a trade body said on Friday.

Raw sugar futures are expected to rise a further 3% by the end of the year, boosted by a tightening in supplies, a Reuters poll of 12 traders and analysts showed on Friday.

Reporting by Rajendra Jadhav; Editing by Arun Koyyur and David Holmes