Early indications are that cyclone Yasi has damaged between 5% to 15% of Australia’s crop. Meaning that approximately between 1.5 to 5 million tonnes of cane may be affected. Queensland Cane Growers Association stated that up to 50% of Queensland’s crop may have been damaged. It remains to be seen how much cane has been only damaged and how much has been destroyed with no possibility of recovery. Depending on the cane lost we could still be looking at sugar production not far off 2010 figures. Namely 3.6 million tonnes.
However, Some farmers have lost their entire crop and others may have the harvest of future years impacted negatively depending on whether uprooting of the crop has taken place, which may be unlikely. It is too early for a complete analysis.
Sugar futures fell slightly today when markets opened. This was more likely a correction from yesterday’s price spikes rather than relief concerning Yasi or supply issues. Nevertheless, despite Yasi, India’s export position and other potential supply risks sugar futures may face resistance on the up side, at least in the second quarter of 2011 as growers move to plant more cane to benefit from increased prices.