Macrossan and Amiet Solicitors held their annual Sugar Cane Pricing Seminar on Thursday 26 May 2022 in Proserpine and Mackay. As in previous years, the presentation in both locations was well attended and supported by Macrossan and Amiet’s cane farming clients, accountants, professional advisers, and other industry-related members.
Macrossan and Amiet was once again fortunate to have Tom McNeil of Green Pool Commodities and Rob Imray of Farmarco Australia present at our seminars in Proserpine and Mackay. The presentations by both Rob and Tom were thoroughly engaging and provided those in attendance with up-to-date global cane price information with an explanation of what is likely to effect cane pricing growers in the Mackay and Proserpine regions in the short and longer term.
Rob’s presentation took the form of a case study of clients which he has provided forward pricing services to for the last fourteen years. The case study examined the immediately previous ten year period and outlined how successful the clients had been by implementing a forward pricing strategy that was consistent with their appetite for risk. If illustrated that by doing so the particular clients were able to insulate themselves completely from the troughs of the global sugar cane price cycle experienced between every five and six years. He explained that by using the peak periods in the price cycle to push out forward selling to four years in the future, these particular clients were significantly better off financially but also had a greater capacity to plan for expansions or other capital projects given the certainty around income to be derived as a result of the forward pricing.
The feedback from those in attendance regarding Rob’s case study highlighted how beneficial it was to have illustrated the distinction between a forward pricing strategy particularly over a period of two peak and trough cycles as against no forward pricing strategy and having cane sold/priced in the immediate season/prompt harvest pools.
Tom’s presentation outlined a number of factors globally driving the international sugar market to the historically-high price that it currently sits at. Tom explained that despite an estimated production surplus of sugar in India of approximately nine million tonnes, the consumption in China and the likely production from the Centre-South Brazil crop is presently indicating a very small global surplus of sugar. This however is largely dependent upon outcome of the continuing battle in Brazil between the price of sugar and the price of ethanol. The price of petrol imports into Brazil could potentially mean more sugar is diverted to ethanol, driving up the sugar price and potentially resulting in a small global production deficit.
Tom also touched on the uncertainty around weather patterns impacting on the major growing areas throughout the world. He explained that the weak La-nina pattern that Australia has experienced over the last summer and continuing has meant drier than average conditions in the Brazilian and Indian growing areas. This will likely continue to have an impact on yield in such areas. There were discussions about the impact on the Indian Ocean Dipole and the fact that this will likely mean dry conditions for the Indian crop. Tom surmised that given the macroeconomic and environmental conditions, there is nothing in the short-term indicating that the price deviates significantly from its current 19 – 20 US cents per pound threshold.
Tom agreed with Rob that the current state of the global market was beneficial and conducive to growers formulating and implementing a forward pricing plan in order to make the most of historically high prices and to ensure the maximum benefit could be derived over the next three to four seasons.
Macrossan and Amiet Solicitors wish to extend our thanks and gratitude to Tom and Rob for making themselves available to present at our annual seminar. Those fortunate enough to attend once again had glowing feedback on the presentations. Macrossan and Amiet appreciates the experience and wealth of information that Tom and Rob bring to such presentations and make available to Macrossan and Amiet for the benefit of our clients and the wider industry in Mackay and Proserpine.
If you would like to attend next year’s seminar, please do not hesitate to contact our office.
