Sugar drops to prices last seen in GFC
ON A visit to a Palmyra cane field, commodity analyst Charles Clack said he was able to judge the lay of the land, while keeping an eye on changing economic conditions.
Last week Mr Clack presented the outlook for sugar markets in 2020.
Mr Clack said it was no surprise to the 35 growers who attended the Rabobank event in Mackay that the global sugar price had hit a historic low.
At the $150 per tonne range, Mr Clack said sugar had dropped to prices last experienced during the global financial crisis of 2008.
But Mr Clack was optimistic about pricing trends moving into the next financial year.
"Sugar works in cycles and we're very much at the bottom of the cycle," he said.
"We're moving into a more normal price range"
Next year, Mr Clack said global consumption would overtake sugar supplies for the first time since the 2016-17 financial year, leading to a deficit of 5.2 million tonnes.
As global sugar surpluses dissolved, Mr Clack said the market would become more volatile allowing growers to seize opportunities for higher prices.
"When we get into next year, the world price will need to move," he said.
He estimated sugar prices would move to 13-14 US cents per pound.
While there may be some competition from Indian, European, Brazilian and Thai sugar producers, Mr Clack said the global deficit meant the world would still need Mackay's cane.
Palmyra grower Tony Bugeja said competing with those international players was like being "in a market with a lot of time bombs".
"We're in a corrupt market - we're in the world market," he said.
While Mr Bugeja said he was hopeful the analyst was right, and added "we need more time to watch the market".
Mr Bugeja said many growers were struggling to produce razor thin profits.
"Energy, insurance, water - our input costs is a big issue," he said.