Sugar prices in China are expected to embrace a new round of increase as Guangxi, where sugar output accounts for more than 60 percent of the country's total, is plagued by floods, the Shanghai Securities News reported on Thursday.
Meteorological experts point out that Guangxi suffered large-scale floods this autumn, which is very rare and is closely related to El Nino. Brazil, world's largest sugar producer, has seen this year's crushing season delayed and sugar quality fall due to rainy days, which will lead to a cut in sugar output.
At present, the sugar industry in Brazil has been in trouble. Statistics of the industry association Unica show that of the 300 sugar plants in Brazil, 80 were shut down. Additional ten are expected to be closed within the year.
Affected by the El Nino, drought occurred in the largest sugar producing area in India, likely leading the sugar output in 2015/2016 crushing season to fall more than 5 percent. The international sugar industry organizations estimated that in the 2015/2016 crushing year, the global sugar market will see a supply gap for the first time in six years with the gap between 2 million metric tons (tonnes) and 2.5 million tonnes.
On domestic market, sugar output showed a downtrend amid a stable growth in consumption. In the first three quarters of the year, sugar prices in China soared about 23 percent. This year, the cut in domestic sugar output is far bigger than expected.
Due to a continuous fall in sugarcane prices and shrinking planting areas, China will see a continuous drop in sugar output in the 2015/2016 crushing year, said industry insiders. On the A-share market, investors can focus on companies including Nanning Sugar Industry Co. (000911.SZ), Guangxi Guitang (000833.SZ) and Cofco Tunhe (600737.SH).
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