Thailand produces a significant amount of sugar for export to the global market, and any change in domestic production has an impact on the country's ability to engage in trade. For the last two sugarcane growing seasons, the output was negatively affected due to the drought in the country. However, the situation has seemed to improve for the upcoming marketing year (MY) 2021–22 (December 2021–November 2022), with the USDA projecting sugarcane production at 95.1 million mt, a YoY increase of 38% from MY 2020–21. Favorable agro-climatic conditions and appropriate rainfall between November 2021 and March 2022 have produced above normal sugarcane vegetative growth in large areas in the northeastern region and the central plains, which respectively have a share of 46% and 25% of total sugarcane production in Thailand.
According to the Thai Meteorological Department (TMD), the precipitation between January and March 2022 was more than double the average precipitation for that time. It has been forecasted that the La Nina phenomenon will increase precipitation by 10% between April and June 2022 compared to normal levels. The higher levels of precipitation will increase sugarcane production and, subsequently, centrifugal sugar production as well. Sugar production for MY 2021-22 is forecasted at 10.6 million mt, a YoY increase of about 40%. It is expected that the sugar extraction rate will remain at a level of around 110 kilogrammes of sugar per tonne of cane. Sugarcane utilization for sugar production is expected to fall to 97 percent of total sugarcane production, down from 98 percent in MY 2021-22, with a new sugar-juice-based ethanol facility begins operations in December 2021.
Despite favorable rainfall and a projected rise in yield and production, some farmers are anticipating that the average yield will remain virtually the same as the previous year. Farmers are concerned that they will have to reduce their fertiliser usage by half, due to a surge in fertilizer prices after the Russia-Ukraine Conflict erupted in February 2022. Fertilizer costs account for about 10–15 percent of total sugarcane production costs, and it is a critical input for the commodity. Due to the droughts, many farmers have shifted to cassava production from sugarcane production, and the trend seems to continue even this year as concerns regarding fertilizer prices grow. The fact that cassava uses 40% less fertilizer than sugarcane makes it a more cost-efficient and attractive option for farmers. It is expected that many farmers will continue to grow cassava in MY 2022–23, in anticipation of higher return margins from cassava than from sugarcane.