The May 1998 futures contract on New York's Coffee, Sugar & Cocoa Exchange rose a touch Monday to close at 9.05 US cents a pound. But it remains well below a recent peak of around 12.4 cents/lb late November and below year-ago levels of 10.71 cents/lb.

"Although the price outlook is encouraging for the crop which is now in the field, the longer-term outlook is less promising," Ian Ballantyne, general manager Canegrowers, said late Monday in a statement.

Cane farmers in Australia's Queensland state are protected from short-term fluctuations in sugar prices by virtue of collective marketing arrangements. Queensland Sugar Corp has compulsory acquisition powers for raw sugar produced in the state, the source of more than 90 per cent of Australian production. QSC collectively markets the rawsugar internationally and domestically. It deducts costs before passing on returns to growers.

Ballantyne said last week around 70 per cent of next crop year's expected production already has been priced. Much of this pricing was completed when prices were up and the Australian dollar was weak, he said.

As a result, he expects pool returns on sugar produced next crop year to be higher than from the last crop. The Number 1 pool return to growers from raw sugar produced last crop year ended June 30, 1997, was A$342.12 a tonne. The pool return for this crop year hasn't been declared.

Ballantyne said he expects a gain of at least A$10 and may be a bit more a tonne. Australia sugar production this crop year reached 5.73 million metric tons, of which 91 per cent or 5.22 million tons was produced in Queensland.

With only 15 per cent used domestically and the remainder available for export, this makes Australia a major participant in the world market.

Government and industry groups expect production tosteadily expand over the next decade.