Growers feel the pinch as global sugar price falls below 12 cents per pound
http://www.abc.net.au/news/2015-04-01/growers-feel-the-pinch-as-global-sugar-price-continues-to-fall/6364796?section=qldApril 01, 2015 at 4:47 PM
Cane growers are feeling the pressure as the global sugar price continues to fall.
The price for raw sugar fell to 11.97 US cents per pound overnight, the first time in six years it has fallen below 12 cents.
Canegrowers Queensland chair Paul Schembri said if the price remains in the doldrums, the industry would be hit hard.
"We are an industry that is highly vulnerable to the world price, so to hear that the global sugar price has fallen below 12 cents is not good news for this industry," he said.
Mr Schembri estimated the current price and exchange rate combined to fetch growers a spot price of about AUS$345 per tonne of cane.
Canegrowers Queensland estimates growers need $380 to $400 per ton to break even.
"Certainly there is no doubt this current price, with the current exchange rate, is delivering a price that is below the price of production," Mr Schembri said.
"But I need to point out that what's important here for Australian growers is the long term pattern of these prices.
"As Australian growers, not all but most of us, are involved in some form of hedging the price risk.
"So I would point out that the only offset (against the current price) is that we are partially sheltered from the impacts of the world price (by hedging).
"But you can't deny that the world price is low and if it extends for an indefinite period of time, it will do a lot of harm and economic damage to our industry."
Greenpool Commodities analyst Tom McNeil said with prices so low, growers around the world would be carefully considering their options.
He said Australian growers at least had the advantage of long term pricing options
"Australian producers have more access to the futures market and are a bit more likely than some of the other global producers to have some of their product hedges a little further down the track."
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