Global sugar prices will remain high throughout next year at around 12 US cents a pound, according to Prakit Pradipasen, chairman of Thai Sugar Millers Corporation (TSMC). The price reflected tight global supplies, he said, and could translate into local sugarcane prices of around 700 baht per tonne. 

Mr Prakit anticipated that strong demand would reduce the global sugar surplus to one million tonnes from around three million at present.

As well, rising demand for sugarcane to make ethanol for gasohol in many countries could curb exports further. India, one major exporter, has already frozen sugar exports this year in order to serve local demand.

He forecast for the 2008-09 crop year (November-April) in Thailand, output would be around seven million tonnes, similar to the current crop year and up from 6.38 million tonnes in 2006-07.

He also expects world sugar prices to be pushed up due to the influx of investment from hedge funds.

As with other commodities, sugar prices have been highly volatile lately. Sugar last month rose to 18 cents a pound from 11 cents before easing back to 12.20 cents recently.

However, Mr Prakit dismissed concerns that Thailand would face a sugar shortage because of the biofuel boom and a shift by farmers to planting cassava for biofuel instead of sugarcane. He said Thailand would remain the main exporter of sugar in Asia.

''The government's strong support for ethanol will only slightly affect the sugar supply, even though E85 (85% ethanol and 15% gasoline) will possibly replace gasoline in the near future,'' he said.

He also noted that cassava yielded lower returns compared to sugar. ''Cassava causes damage to the quality of soil in the long run, and farmers all know about this.''