Thailand’s sugar crop prospects are deteriorating just as the country’s millers are struggling to get to grips with the implications of new export regulations announced this week.

Sweetener production is likely to drop to 7-8 million tons in 2023-24 from 11 million tons crushed in the previous crop, according to the Thai Sugar Millers Corp. That means exports could fall to 4-5 million tons next year from 7 million expected in 2023, said the group’s director Rangsit Hiangrat.

The outlook has worsened since early September when Rangsit estimated output in 2023-24 at around 9 million tons and exports of 6 million tons next year compared with 8 million tons initially forecast for 2023. Drought has ravaged the plantations and reduced the amount of cane available for crushing. Thailand is one of the world’s top three exporters.

The output decline in Thailand will further tighten global supply and support futures that are already near the highest level in 12 years after India said last month it would keep curbs on overseas shipments beyond the end of October.

Now the industry also needs to grapple with the consequences of a government decision on Tuesday to list sugar as a controlled commodity, a move aimed at ensuring domestic supplies of the sweetener and keeping inflation in check. The addition to the control list is effective for one year.

Like other controlled goods, this means that any retail price changes or exports of one ton or more of sugar will need to be first cleared by a regulating panel. Rangsit from the millers group said the move may cause delays in fulfilling delivery contracts for sugar already sold on the futures market.

Disruption Risk

“Exports will be affected and the industry will be hurt, including millers and cane farmers, as long as the government is slow to clear up uncertainties,” Rangsit said in an interview. “If exporting sugar becomes more difficult, it will disrupt global supply and the futures contracts we’ve already committed to.”

Meanwhile, groups of cane growers around the country have said they will protest the cabinet’s move on Sunday, with plans to gather and block sugar from being moved out of mills to be sold at what they called unfair prices.

The government said Tuesday it will seek ways to supplement cane growers’ income and expects to propose a measure in a cabinet meeting in two weeks.