Recently, "the national white sugar production reduction of 170,000 tons" "sugar prices record high", rushed to the hot search, what is the reason behind it? I will take you to analyze the following.
A, domestic factors
Guangxi, Guangdong, Yunnan, Xinjiang and Inner Mongolia are all sugar production, Guangxi 21 years to reach 6.11 million tons, the other places together only half of Guangxi, so Guangxi's sugar production in the country occupies an absolutely dominant position. Comparison of data from 23 years and 22 years, other areas of sugar production are growing, while Guangxi in the lower, so the main cause of sugar production reduction in Guangxi.
And the main reason for Guangxi's production reduction is the frequent occurrence of dry weather in Guangxi in the second half of last year, high temperature and little rain affecting the growth of sugarcane. It is expected that the 2022/23 season in Guangxi? West sugar cane production fell to about 44 million tons, a year-on-year decrease of 12.33%. With less sugarcane, naturally less sugar will be produced.
Second, foreign factors
International sugar trade is dominated by cane sugar, production and exports are concentrated in the three major cane-producing countries of India, Brazil and Thailand.
As the world's largest sugar producer, India as early as last year sounded the alarm, last year, the Indian government had announced that the sugar export restrictions will be extended for one year to October 31, 2023, to ensure the supply of sugar in its domestic market.
Thailand's cumulative sugar production for the 2022/2023 season stood at 11,022,300 tons as of April 2, 2023, data showed. As of the end of March, India's sugar production for the 2022/2023 season stood at 29.96 million tons, down 3.4 percent from 30.99 million tons in the same period last year. Two major producing countries production are significantly lower than expected, making raw sugar prices continue to come out of the new high.
Brazil, although the new crushing season is approaching in April, the 2023/2024 season is expected to have a substantial increase in production, but it will only gradually enter the crushing peak around June.
This sugar production cut will likely bring the following impact:
Sugar price rise: Sugar, as one of the indispensable foodstuffs in people's life, the reduction of sugar production will likely push up the market price, which will bring some pressure on the cost of living of consumers.
Stabilizing the sugar market: Reducing production can effectively control the supply and demand relationship in the sugar market, avoiding inventory backlogs and improving the stability of the market.
Promoting the transformation and upgrading of enterprises: In fact, this white sugar production cut is briefly a good thing for sugar enterprises, which can improve the profitability of sugar enterprises. But given that China is currently in the off-season consumption, the summer is approaching, the peak season of sugar is coming, the aftermath of the sugar market is tight, the supply side of the constant changes, the pressure of enterprise risk increases, which will prompt the bulk of the sugar enterprises to go to think well about how to carry out effective risk management and profit protection. Plan the prominence of the problem of overcapacity, will force the sugar industry enterprises to accelerate the transformation and upgrading, improve the added value of the product, in order to better adapt to market competition.
Overall, sugar production cuts, although it may bring a certain economic impact, but it is also an important initiative to adjust the market supply and demand relationship, which will help promote the healthy development of the sugar industry.