Sugar glut sees demand wane
IT IS possible to have too much of a good thing.
The world sugar market is now in surplus, meaning demand for the cane being crushed in Central Queensland and northern New South Wales could wane for at least the next 18 months.
Global prices too have fallen, diving from a peak of US36c per pound 12 months ago towards an eventual bottom of US18c per pound.
The picture for Australian growers is slightly more complex, but also a tad more positive.
There might be a glut of sugar around the world in general, but India, Indonesia and China are still desperate for sweetener.
The short travel time of our sugar freight from Australia to there also means growers have a distinct advantage over their powerful Brazilian competitors.
Growers will also have a softer landing because the Australian dollar is creeping south, meaning buyers may even pick up more of the product.
Queensland Sugar monitors the world market for growers across the country.
State Treasurer Steve Stone said the price of sugar will not fall the way it had historically because demand for it in bio-fuels swung in when it reached about US19c a pound.
"Prices are considerably weaker than they were 12 months ago, but they are still well above the long-term average price for sugar and above the cost of production across Australia," Mr Stone said.
Mr Stone was still predicting a strong 2012 crushing season for growers in both states.