After touring the cane fields in North-East Thailand, we have reduced our estimates for cane planting and crushing next season.
Thailand will crush approximately 65m tonnes of cane in 2020/21.
This is their poorest crush in over 10 years.

Thailand’s Poorest Crush in Over 10 Years

We think Thailand will crush 65m tonnes of cane next season, less than half of what was crushed in 2018/19.
This is because farmers have switched from planting cane to cassava due to its higher profitability.
The increased demand for seed cane also means more farmers are reserving cane for this purpose, dropping availability to a 10-year low.

Planting and Crushing Decline in the North-East

The North-East is Thailand’s largest cane-growing region, accounting for 40% of its yearly production.
However, both cane planting and crushing will decline there next season.

Crushing will reduce by 8.2m tonnes year-on-year, totalling 24.4m tonnes.

The North-East’s planted area has also dropped to its lowest level on record.
In some areas, 50% of cane has been lost to other crops, most notably cassava.
We have consequently reduced our North-East planted area by 30%.

The switch to cassava started to occur in 2019/20, as cane agricultural yields almost halved in some areas and seriously reduced the profitability of cane.

More recently, other factors such as cassava’s shorter growing cycle, government assistance on price, and its better drought-resistance have supported the farmers’ decisions to switch.
With this in mind, we think cassava could be a threat to cane planting in the North-East in the long-term.

High Demand for Seed Cane Further Reduces Availability

Farmers will likely reserve more of their cane from the upcoming crop for seed cane than they have done in previous years.

This is because cane prices should move above 2,000 baht/mt in 2020/21, in excess of the expected cane price at 1,200 baht.
Cane prices should improve this season and over the next couple of seasons.
As a result, we think we will see a strong demand for seed cane in Q4’20 in the North-East, which will reduce the volume that would otherwise have been crushed in 2020/21.

Cane Yields Could Increase, But Not Enough

We think cane yields in the North-East will increase slightly from last year.
This comes as farmers are more likely to look after their cane crops well this year, in light of the good price.

Rainfall should also be good going forward, despite former difficulties caused by drought earlier in the year during the key growing stage.
However, any increased yields will unlikely make up for the large reduction in production.

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Nateetorn Petchphankul

Nate joined CZ (Thailand) in 2020. He graduated from Kasetsart University with a Bachelor of Science Degree in Agriculture. Given his education background, one of his tasks is to spend some time out in the field speaking to local farmers and producers to understand the crop situation in Thailand mainly sugarcane and its competitor crops. Nate is currently responsible for crop and sugar analysis of Thailand, provide crop outlook of Thailand on CZ App also support trading team on developing and growing business relationship with domestic clients.