Chief executive David Rutledge said Queensland's 1998 season raw sugar production could reach 5.25 million tonnes, slightly higher than 1997 season production of 5.22 million tonnes.

The final result would depend on the extent of damage caused by adverse weather experienced earlier in the season, he said.

"Extreme flooding in the state's North earlier this year and continued dry weather in the South have affected 1998 season production, with lower yields and reduced sugar content as a result," Rutledge said.

However, an increase in area under cane in some regions, such as Mackay and the Herbert, should enable production levels achieved in 1997 to be maintained despite these setbacks,he said.

Rutledge said that all 1997 season production had been priced and sold. "Demand for Queensland raw sugar remained strong in both domestic and international markets," he said.

As this season's production levels were not expected to increase QSC would be working to consolidate its position within established markets rather than sourcing new markets for Queensland sugar, he said.

Despite current economic problems in Asia, the region remained a crucial market destination for Queensland with around 65 percent of raw sugar exports sold into this market. "Queensland's 1998 season sales to Asia are expected to remain generally unaffected, with the possibility of a slight increase in exports into this region as a result of the smaller Thai crop," he said.

Thailand's 1997/98 production fell significantly to 4.2 million tonnes from 5.8 million tonnes in 1996/97 because of drought.

Analysts were forecasting an increase in Thai production in 1998/99, but only to between 4.5 million tonnes and 5.0million tonnes, Rutledge said. All Queensland sugar mills, including the new Atherton Tableland mill, were expected to start crushing by mid-July.

All Australia's export sugar comes from Queensland.