Australia's sugar crop faces cyclone threat
Sydney, February 1, 2011
A massive cyclone due to slam into northeast Australia this week threatens to damage up to a third of the sugar cane crop in Queensland state, the heart of the national sugar industry, an industry official said on Tuesday.
"If it keeps going the way it looks there's going to be massive (sugar cane) losses in some districts or at least a couple of districts," said Steve Greenwood, chief executive of Queensland's Canegrowers Association.
Cyclone Yasi is expected to make landfall on Wednesday night as a category four cyclone, meaning it could generate winds of up to 250 kph.
Queensland grows more than 90 per cent of sugarcane in Australia, a leading raw sugar exporter. The area most at risk from Cyclone Yasi is north of the city of Townsville.
"About a third of Australia's sugar cane crop is grown north of Townsville so about 10 million tonnes could be threatened out of about 33 million that's usually harvested - but I'm not talking about a loss of a third as it depends on just where the cyclone goes...it may miss some areas," said Greenwood.
Raw sugar futures in New York fell as much as 4 per cent on Monday after investor selling from near 30-year highs triggered automatic sell stops below 33 cents a lb, basis March.
Still global supply tightness continues to underpin the market because of uncertainty about the level of exports from India and the effect of Queensland's looming cyclone.
"It looks like a very large system -- a category four cyclone will create significant damage. Once you are talking category four, you are talking 40 to 50 per cent losses for cane in the ground as the cane breaks and smashes," said Greenwood.
"For category three and below, cane is pretty resilient.
Australia harvested 27.4 million tonnes of cane in 2010/11, well below expectations of at least a 33 million tonnes crop as rain disrupted harvesting and left around 5 million tonnes uncut.
Australia's leading sugar exporter, Queensland Sugar Ltd (QSL), expects the country to export around 2.4 million tonnes of raw sugar in 2010/11, down from the previous season's 3.2 million tonnes as torrential rain hit crops late last year, resulting in the worst harvest in 20 years.
"This year we were predicting a slightly better season up until this cyclone and flooding and wet weather - I was hoping around 29 million tonnes but at this stage it is just a guess," said Greenwood.
Commonwealth Bank of Australia rural commodities strategist, Luke Mathews, said Queensland's sugarcane and horticulture industries would bear the brunt of the cyclone, making production losses probable.
"As the storm moves inland, heavy rain may result in flooding across pastoral and northern cropping regions," said Mathews. – Reuters