NSW sugar growers to receive best price in years

Sugar price spike benefits NSW growers thanks to forward thinking

Agribusiness
NSW sugar cane growers will reap the benefits of careful hedging after Sunshine Sugar's finance controllers took advantage of positive world prices.

NSW sugar cane growers will reap the benefits of careful hedging after Sunshine Sugar's finance controllers took advantage of positive world prices.

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NSW Sugar Milling Co-operative takes advantage of positive sugar prices in the wake of consumer demand and Asian drought.

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Global sugar prices as recorded on the Intercontinental Exchange have leapt past US 17 cents a pound, much more than predicted a year ago due to rising demand while drought affected Thai production will effectively give NSW growers a premium above the ICE 11 price. They can now expect up to $38 a tonne for their cane, 15pc up on previous years.

NSW Sugar Milling Co-Operative CEO Chris Connors said a decision to "carefully hedge" half the coming crop helped secure grower prices.

Wednesday's spot price jumped .77c to 17.94c/lb with the Australian dollar at US77c but Mr Connors warned speculators to look beyond the favourable spot price to the forward sell, which remains hovering around 16c/lb for the next three to four months.

"The forecast for the 12 months following look murky, with prices more like 14c/lb at an 82 cent Aussie dollar," he said.

"We have undertaken careful hedging to secure those better prices. We've done it in the past and we'll do it again."

On top of ICE 11 prices NSW growers will reap a geographical premium for being a part of the eastern hemisphere, with drought in south-east Asia reducing Thai sugar cane production by half. As supply is restricted premiums go up and Mr Connors estimates that advantage to Sunshine Sugar will be 200 to 300 points or $60 to $100/t of sugar.

"We are expecting to get $480 to $500/t for our sugar, with the growers getting $37 to $38/t for their cane.

"You need hedging skills to do this but we now have certainty over 50pc of our crop. That is a positive thing."

Meanwhile in NSW regular inundation of cane fields since before Christmas has yielded the best crop in years. Cane on the Lower Clarence, the worst flood affected of the growing regions, was well up out of the water for the most part and took advantage of warm days when the sun returned with the result that the greater biomass will likely help to reduce frost risk this winter.

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