Bloomberg News

Guangxi Sugar Output to Drop on Cold Weather, Brokerage Says

January 15, 2013

Sugar output in southern Guangxi province in China, the world’s second-biggest consumer after India, may fall as much as 6 percent after cold and cloudy weather reduced yield, according to Wanda Futures Co.

Output in the nation’s biggest producing region may be as low as 8.5 million metric tons in the crushing season that began Oct. 1, compared with 9 million tons estimated in November, analyst Liu Yonghua said from Guangxi’s capital Nanning.

Most producers in the province expect output to drop by 5 percent in 2012-2013 because of frost, Xinhua News Agency reported Jan. 12, citing an industry meeting. Reduced output may boost China’s imports, which gained 79 percent in the first 11 months of last year. Sugar futures in New York fell the most in a week yesterday as Goldman Sachs Group Inc. cut its price forecast amid ample global supplies.

“It’s been an unusually cold year,” Liu said by phone today. “Lower temperatures combined with cloudiness have negatively affected sugar yield.”

Sugar for delivery in May on the Zhengzhou Commodity Exchange fell 0.6 percent to 5,544 yuan ($891) a ton at 2:20 p.m. in Beijing. The most-active contract declined 11 percent in the past year after farmers boosted planting.

Sugar in New York dropped 21 percent in the past year as farmers from Russia to Thailand planted more crops. China’s harvest may exceed 14 million tons in 2012-2013, up from 11.5 million tons a year earlier, the China Sugar Association estimated on Nov. 1.

The country announced plans to buy 1.5 million tons of local sugar for stockpiles, including 800,000 tons contracted in December and another 700,000 tons to be bought this month, according to industry website gsmn.com.cn.

Raw sugar in New York will be at 18.5 cents a pound in three and six months, down from an earlier estimate of 22 cents, Damien Courvalin, an analyst at New York-based Goldman, said in a report dated Jan. 13.

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net; William Bi in Beijing at wbi@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net


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