New season early alert sugar price correction risk

In late September, due to the continuous shortage of supply, the price of sugar climbed to a peak of 6,000 yuan/ton in the 2018/2019 pressing season. After the National Day holiday, the new press season of 209/2020 officially opened, and sugar prices entered a stagflation stage. After the new sugar will gradually come to market, sugar prices rise or come to an end. The domestic market will see a big increase in supply in December, when prices are most vulnerable to lows.

Supply will increase rapidly at the beginning of the pressing season

According to the calculation of domestic sugar production in recent three years, the average output in October, November and December is 280,000 tons, 680,000 tons and 2.34 million tons respectively. By the end of December, the market supply will rapidly climb to a high of more than 2 million tons.

January is the peak of China's sugar monthly output, march is the peak of China's sugar industry inventory, supply pressure is still huge, when sugar enterprises under the pressure of sugar payment payment, selling desire is strong, easy to form sales price "stampede" phenomenon.

At the same time, imported sugar supplies were released. From June to September, China's total imports of raw sugar reached 1.05 million tons, and it is estimated that about 200,000 tons of sugar will be imported in September. According to the data of the past three years, the total amount of sugar imported from October to December is about 600,000 tons. Therefore, after the completion of the overhaul and restoration of the sugar processing plant, the supply of nearly 2 million tons of processed sugar will hit the market price.

From the overall level of supply and demand analysis, the new press season will appear at the beginning of the oversupply situation. According to the sales in recent years, the total market demand from October to December is about 1.5 million tons. As mentioned above, the maximum supply is more than 3 million tons, and under the situation of oversupply, the price of sugar is difficult to rise.

High inventories in major producing countries will curb the rise in international sugar prices

India will have up to 14.2 million tons of inventory carried forward to the next season in 2018/2019. Thailand has stocks of more than 6m tonnes; As of mid-september, Brazilian inventories had reached a record high of 8.5 million tons. The surplus production of these traditional sugar exporting countries has caused huge supply pressure on the international raw sugar market.

The international sugar market will not see much room for improvement in trade flows during the 209/2020 season. India's sugar export subsidies may prolong the downturn in the global sugar market. In August, the Indian government approved subsidies of rs 62.68 billion for sugar mills to export 6 million tons of sugar during the 2019/2020 season, and Indian sugar producers will export sugar to China, Iran and other countries after October 1. In addition, by the end of July, Thailand had exported 7.94773 million tons of sugar during the 2018/2019 press season, up about 4.04% year on year.

Transfer from: HeXun