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Cyclone Damage to Sugarcane is Limited

04 February 2011

AUSTRALIA - Sugar prices turned sharply lower, amid thoughts that Cyclone Yasi had not dealt Australia's cane plantations as big a blow as had been feared, with the slide hastened by a sudden selling wave.

New York sugar for March delivery tumbled 9 per cent at one point, to 32.05 cents a pound, with London white sugar losing more than 5 per cent before hitting a safety net at $800.00 a tonne, reports agrimoney.com.

The declines followed assessments that Cyclone Yasi's 190 mph winds, which reached Queensland roughly 24 hours ago, had missed plantations where growers left cane standing for harvesting next season, after heavy rains brought a premature end to the 2010-11 cut.

"There was 5.7m tonnes of cane still left unharvested, that majority of which was in the regions of Burdekin and Central, which appears to have escaped any major cyclone damage," Australia & New Zealand Bank said.

Separately, Maryborough Sugar Factory reported that port facilities at Cairns and Mourilyan appeared to have escaped significant harm, lowering fears for logistical disruptions to shipments from Australia, the world's third-ranked sugar exporter.

Maryborough Sugar, Sydney's only listed sugar miller, said it had itself also sustained only limited cyclone damage, fostering a 10 per cent rebound in its shares.

Loss estimates

Canegrowers, the Queensland-based sugar producers' group, estimated that the storms halved the "productive potential" of affected areas, which are responsible for some 30 per cent of national cane output, implying a 15 per cent cut in output.

And plantations could suffer further damage if Cyclone rains caused floods to follow on from the high winds.

However, ANZ analysts forecast that the loss in Australia's 2011-12 sugar production at "up to" 10 per cent, equivalent to roughly 400,000 tonnes.

The country's sugar output will still rise, by some 5 per cent to 3.8m tonnes, even if exports "will be constrained for yet another year to below 2.5m tonnes".

Shipments hit 3.6m tonnes at the end of the last decade.

Fat finger error?

Analysts at Commerzbank highlighted that Yasi had "done less damage to the eastern coast of Australia as initially feared", an observation echoed by Jake Wetherall at Rabobank.

"There is some element of that, and commodities had a good run up yesterday," he said.

He also flagged a stumble in mid-morning deals, New York time, when prices lurched lower by some 3 per cent in a move which could have reflected the triggering of automatic sell orders, or even potentially trader error.

"The authorities are not treating this as a fat finger error at the moment, but it looks like one," he said.

New York sugar for March stood 3.1 per cent lower at 34.21 cents a pound at 16:30 GMT, with London white sugar down 2.8 per cent at $820.80 a tonne.

TheCropSite News Desk



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