Summary: Since late April 2015, the sucrose prices in China and abroad have
undergone fluctuations. In the future, the domestic demand, weather conditions
and the USD currency trend will play roles in impacting the prices at home and
abroad.
The Chinese version is written by Zhang Zihai from Avic Futures Co., Ltd.
Source: Internet
The USD/INR exchange rate in this article, USD1.00=INR63.5376 is sourced
from Exchange-Rates.org on 22 May, 2015, as the People's Bank of China has no
such references.
Since late April, 2015, the sucrose prices both in China and abroad have
undergone fluctuations.
China: The futures price of white sugar
from Zhengzhou Commodity Exchange fluctuated from USD912/t (RMB5,580/t) to
USD932/t (RMB5,700/t).
International market: The futures price of
raw sugar from the Intercontinental Exchange ranged from USD271/t to USD300/t.
The following reasons are for the sucrose price fluctuations in China and in
the international market since late April 2015.
China
- Continuously decreasing output. In the 2014/15 extracting season (during
October 2014-September 2015), the accumulative output of sucrose reached 10.31
million tonnes by the end of April, a YoY decline of 22%. Of this, Guangxi
Zhuang Autonomous Region produced 6.32 million tonnes in total, down by 26%
YoY. The China Sugar Association (CAS) expected a YoY fall of 2.8 million
tonnes in 2014/15 output, from 13.3 million tonnes to around 10.5 million
tonnes.
- Increased consumption. Statistics from CAS has it that by the end of April,
the sales rate of sucrose has increased by 7.9 percentage points YoY to 52.9%,
so the volume accumulated to about 5.5 million tonnes.
- Largely raised imported sugar. According to statistics released by CAS on 22
April, the import volume of raw sugar was 490.6 tonnes in March, a sharp MoM
growth of 295.9%. This can be attributed to the constantly dilated price gap
between China and the international market. Induced by the significant profit
increases, the domestic enterprises imported a large amount of raw sugar,
including smuggled one, which lashed the local sucrose industry. In May, the
profit from processing imported raw sugar has arrived at USD343/t (RMB2,100/t),
up by 8% MoM.
International market
- Brazil
In April, it only exported 886,200 tonnes of sucrose, down by 31.4% YoY. Of
this:
Raw sugar: 623,500 tonnes, down by 27.1%
Granulated sugar: 262,700 tonnes, down by
39.8%
The Indian government has issued the export subsidy policy for its own sugar
industry, which has had negative impact on the exports from Brazil. Now the
Brazilian enterprises are collecting data to apply for an international trade
investigation against the subsidy policies issued by India and Thailand.
In February, the Indian government decided to give a subsidy of USD63/t
(INR4,000/t) to the sugar plants for their exports of raw sugar. On 12 May,
Maharashtra, the largest edible sugar production state in India (37% of the
total output) approved the subsidy to increase by USD16/t (INR1,000/t) to USD79/t
(INR5,000/t) for the local sugar plants.
- India
By 15 May, the output of sucrose in the 2014/15 extracting season has risen by
16% YoY to 27.8 million tonnes. According to the Indian Sugar Manufacturer
Association, the payment for sugarcane in arrears by sugar plants reached USD3
billion (INR210 billion), due to the low sucrose price and the subsequently
tightened capital flows.
In the future, the sucrose price in China and abroad will be influenced by:
Demand. The demand will be increased in the
coming summer, a peak period for sucrose in China, which is beneficial to the
price rise.
El Nina Phenomenon. On 14 May, the National
Weather Service of the United States predicted that the occurrence rate of this
phenomenon is 90% in northern hemisphere in 2015 summer. This will bring wetter
weather to the central/ southern Brazil (major sucrose production regions) and
draw back the sucrose yield.
USD. It is expected that the USD will
rally, pulling down other currencies such as the BRL. This will be favorable
for the sucrose exports, but unfavorable for the global sucrose prices.
About CCM:
CCM is the leading market intelligence
provider for China’s agriculture, chemicals, food & ingredients and life
science markets. Founded in 2001, CCM offers a range of data and content
solutions, from price and trade data to industry newsletters and customized
market research reports. Our clients include Monsanto, DuPont, Shell, Bayer,
and Syngenta. CCM is a brand of Kcomber Inc.
For more information about CCM, please
visit www.cnchemicals.com or get in
touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.