BEIJING - The drought that affected China's main sugar producing areas will not reduce the country's output this year, but will add to pressures caused by the limited supply, according to experts.
"The drought will not affect China's overall sugar output this year, but it will stretch supplies that are already very tight," said Huang Guiheng, manager of the research department at Bric Global Agricultural Consultants Ltd in Beijing.
A drought hit sugar cane areas in Yunnan province and the Guangxi Zhuang autonomous region, China's top two sugar producing regions, throughout the summer. The nation's sugar output has been in decline since 2008, mainly because of drought and frost.
"The drought was centered in parts of Guangxi and Yunnan. The situation in Guangxi was worse than in Yuannan," said a manager, who would only give his surname as Yang, at www.ynsugar.com, China's most popular sugar-monitoring portal.
Huang said that the sugar canes are between 10 and 20 centimeters (cm) shorter than in previous years in the northern areas of Guangxi. That will result in output in these areas being reduced by between 5 and 10 percent this year. However, major sugar cane areas in Guangxi, including the cities of Chongzuo and Nanning, have not been affected.
Yang said that this year's drought has not been as severe as that in 2010 and output in Guangxi and Yunnan will increase, but only "marginally".
Mo Jiang, vice-president of Chongzuo Xianggui Sugar Co Ltd in Guangxi, also said that the drought "will not have a big influence on output in Guangxi. At present it is still too early to tell whether China's sugar output will increase this year".
"The drought is likely to be a good opportunity for businessmen to speculate on sugar futures, but it will have little influence on prices in the long run. The high price of sugar has mainly been caused by insufficient supply," said Huang at the time.
The domestic price of sugar reached a record high of 7,932 yuan ($1,248) a ton in August. The gap between supply and demand, more than 1 million tons this year and expected to be approximately 2 million in 2012, is being met with sugar imports, according to Huang.
"As domestic sugar consumption is growing by 8 percent year-on-year, imports will keep climbing. China will annually import more than 2 million tons of sugar in the coming years," he said. China imported 424,000 tons of sugar in August, up 42 percent year-on-year.
Source:21cbh.com