Sugar prices tipped to stay strong

Sugar prices are forecast to remain strong during the next couple of years.
Sugar prices are forecast to remain strong during the next couple of years.

SUGAR prices are tipped to stay strong during the next couple of years as the industry recovers from the adverse effects of excessive rainfall and Tropical Cyclone Yasi.

While Canegrowers Mackay chairman Paul Schembri was pleased with the forecast in the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) quarterly commodities report, released yesterday, he warned sugar prices were volatile.

“They are obviously of the view that there will be strong sugar prices going forward to 2015-16,” Mr Schembri said.

“It is a forecast and does not necessarily reflect what might happen.”

The ABARES report predicts global demand for commodities will boost Australia’s agricultural, mineral and energy exports by 14% to more than $250 billion in the 2011 financial year.

Deputy executive director Paul Morris said the value of mineral resources exports was expected to rise 16% to $215 billion in 2011/12, especially on strong demand for commodities from China and other Asian markets.

The report says China’s share of Australian minerals exports rose from 5%in 1999/00 to 37% a decade on, while India’s share rose 10 percentage points to 11% in 2009/10, the report said. Australia is projected to remain the world’s largest exporter of coal in the medium term, underpinned by strong demand from Asia and supported by expansion of mines and infrastructure in Queensland and New South Wales.

Coal would be hampered for the first half of calendar 2011 following the floods in eastern Australia, particularly Queensland.

Export earnings of coal in Queensland could be lowered by $22.5 billion due to lower volumes but the rise in the commodity’s price may partly offset the drop in revenues.

Despite a strong outlook for commodity exports, there were considerable risks with Australia’s leading export market as China raised interest rates and cut government spending to slow down economic growth, the report said.

“There is a possibility that domestic demand could weaken significantly, undermining growth in commodity demand,” the report said.

“On the upside, China appears to have been more resilient to both internal and external shocks than other major world economies.”

The report forecasts higher saleyard prices for beef cattle over the next few years.

The report forecasts:

  • Sugar prices will stay strong during the next couple of years
  • Australia will remain the world’s largest exporter of coal in the medium term
  • Higher saleyard prices for beef cattle during the next few years, reflective of strong competition for young restocker cattle between producers to rebuild herds and feedlotters and processors to meet demand.

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