Only six to eight sugarcane mills were operating on Wednesday in the Australian sugar state of Queensland from the total of 26 as the industry reels from damage caused by recent unseasonal rain downpours and high winds.

In the hard-hit North of the state, only four or five mills among 18 North of Mackay were operating, Ian Ballantyne, general manager of grower organisation Canegrowers, told Reuters.

Heavy rain was still falling in many areas.

The current harvest period (June-December) is normally the dry season in the tropical North of Queensland and the Southern Hemisphere summer the wet season.

"This is a pretty bloody awful week for us because the rain is continuing up there," he said. Only "desperation cane" was being processed.

The industry also watched world sugar prices crash as Brazilian sugar sought markets after big sugar tariff increases by Russia on August 1.

Daily spot sugar prices have fallen consistently since soon after Russia imposed its tariffs, from 9.11 US cents a pound on August 12 to 7.59 cents on September 8. The price hit 7.40 cents on September 4.

Russia raised sugar import tariffs to 78 percent for raws and 48 per cent for whites soon before its recent rouble devaluation, stating the tariffs would be removed at the end of 1998.

Ballantyne and others in the industry blamed present low world sugar prices on Russia.

This was compounding problems in Southeast Asia and forcing Brazil, grappling with cashflow problems, to send sugar normally sold to Russia "anywhere and everywhere", Ballantyne said.

At least one million tonnes of mostly Brazilian sugar was presently available on the world market because of Russia's closure, he said.

David Crawford, deputy manager of the Australian Cane Farmers Association, said that ships laden with sugar were now waiting in Southeast Asian waters for price agreements.

The Australian industry information is that Russia imported 1.286 million tonnes of Brazilian sugar in 1997, including 953,000 tonnes of raws. Before August 1 Russia this year imported 3.2 million tonnes of raws, mostly from Brazil, before closing its doors.

With Brazil headed for a big crop and Russia, the world's biggest import market, closed, prospects were grim, Australian sugar sources said.

In Queensland, continuing rain was compounding damage caused by cyclonic conditions and keeping tractors out of the fields. It was also now rotting much of whatever plant cane survived the initial weather onslaught, Ballantyne said.

"It really is going to have quite a damaging effect next year. I'm really just coming to grips with how bad," he said.

Some cane would not be planted this year at all, he said. "It's almost too late to plant in the next two or three weeks. We won't be planting until early next year which means it won't be harvested in 1999, it will be year 2000 cane," he said.

As previously reported, early estimates are that around one million tonnes of cane has been lost from a previously-expected Australian crop of 41.60 million tonnes, leading to the loss of up to 200,000 tonnes of raw sugar production. This is seen reducing Queensland's raw sugar output to five million tonnes or less, against earlier predictions of 5.2 million tonnes for Queensland and 5.54 million tonnes for Australia as a whole.

The impact next year would be "very significant", probably bigger than in 1998, Ballantyne said.