In recent seasons, Thailand’s sugar production faced severe pressure from dry and drought conditions, but this season’s crop has rebounded strongly, with sugar output poised to set a record above 14.2 MMT. The country regularly exports more than 70 percent of its sugar, placing it comfortably as the world’s second largest seller, and the higher output would be a boon under normal markets, a palpable payoff on changes in government policies to support sugarcane production—not coincidentally lowering perceived overproduction of rice. More recently, the country has also made unexpected progress towards deregulation, at least provisionally, in the face of pressure from Brazil before the WTO.

Given the sustained period of depressed sugar prices in the world market and in the face of this ballooning exportable surplus, Thailand’s Office of Cane and Sugar Board (OCSB) has reportedly approved a plan to cut 2017/18 exports by 500,000 MT. The volume will reportedly be shunted to ethanol production, which has grown steadily in the last decade. Since 2009, the number of ethanol plants has more than doubled, while nameplate production capacity has more than tripled, reported this year near 1.82 billion liters. According to various reports, the OCSB has signaled that it will consider a similar move later this season.

Thailand’s ethanol plants use primarily molasses and cassava as feedstocks, with a smaller volume produced directly from sugarcane, but supply limitations have prevented the country from reaching some of its biofuel use targets. Moving sugar stocks to ethanol should be a further boost for this sector, and according to Nikkei, the OCSB may also seek to lift a ban on the use of in-process cane juice as a feedstock, too.

Thailand sugar supply & demand, ethanol production

Source: USDA, McKeany-Flavell
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