Sugar imports into China, the world’s second-biggest buyer of the raw variety, will probably beat traders forecasts for a second year in the 2013-14 season, according to trading company RCMA Commodities Asia Pte.
China may import 3.6 million metric tons of sugar in the 12 months started Oct. 1, Jonathan Drake, chief operating officer at the Singapore-based trader, said in an interview yesterday when the Kingsman conference in Dubai started. That’s little changed from a year earlier. While the U.S. Department of Agriculture expects Chinese imports at 2.8 million tons this season, Kingsman, a unit of McGraw Hill Financial Inc.’s Platts in Lausanne, Switzerland, forecasts the Asian nation will bring in 2.7 million tons in the period.
“People have got themselves in such a bearish frenzy that they are not talking the same language on China,” said Drake, former Cargill Inc. head of sugar trading. “Maybe it’s affecting people’s awareness that China is probably going to import similar quantities to possibly more than last year. What would you do if you just built a new refinery?”
Raw sugar futures traded on ICE Futures U.S. in New York declined in the past three years, the longest losing streak in more than two decades. Prices, down 4.1 percent this year, slid as supplies outpaced demand. The global sugar surplus will be 4 million to 5 million tons this season, according to Drake.
China brought in 3.7 million tons of raw sugar in 2012-13, customs data on Bloomberg show. That’s almost four times the amount a USDA unit forecast at the start of last season. Purchases beat estimates as a government stockpiling program lifted domestic prices, attracting more shipments from overseas.
The nation’s stockpiling program may be phased out and partially replaced with direct subsidies to cane and beet farmers as early as the crop starting October 2014, said Zhao Lihua, a director at the economy and trade division of the National Development and Reform Commission. The International Sugar Organization in London forecasts Chinese purchases to decline 36 percent to 2.35 million tons, it said on Dec. 9.
“China will be very much linked to the price support policy domestically and there has been speculation that cotton is moving away from support programs and whether sugar will follow suit,” Piero Carello, a London-based general manager of Olam International Ltd.’s sugar division, said in a separate interview yesterday. “The country has significant stocks, the domestic market has been under pressure significantly and the crop is probably a touch lower. The big question purely what will be the price support policy.”
China brought in a record 709,873 tons of sugar in October, customs data show. The nation’s annual purchases may be about 3 million tons, according to Olam.