China’s sugar imports seen falling by half in 2014 – ANZ

(Reuters) – China’s sugar imports could fall by half to 2 million tonnes in 2014 because of high domestic inventory after robust imports this year, putting a cap on global prices, Australia & New Zealand Banking Group said on Wednesday.

The world’s second-largest user of the sweetener after India consumes about 7 percent of global output and is viewed as a bright spot in an over-supplied global market where prices are not far off three-year lows hit in July.

“China’s sugar imports for October were the largest monthly volume on record at 710,000 tonnes,” senior agricultural economist Paul Deane, said in a report. “As a result, China looks on track to import over 4 million tonnes for the first time in a calendar year since at least the mid-90s.”

China has stockpiled sugar, cotton, soy and corn for several years now, paying above-market prices to support farmers. But the policy has driven up domestic prices and fuelled a surge in imports, dealers said.

Benchmark New York raw sugar futures fell to a nine-week low of 16.80 cents a pound on Tuesday because of abundant global supply. They are down sharply from a one-year high of 20.16 cents touched on Oct. 18, driven by a fire at warehouses in No.1 producer Brazil.

“The rebuilding of stocks in China, particularly in government reserves, will diminish the need for imports in 2014. We see this as placing a natural cap on global sugar prices in 2014,” said Deane.

“If this were to occur throughout 2014, China’s sugar imports would likely fall to 2 million tonnes, leaving an additional 2 million tonnes of sugar to find a buyer.”