With the start of the 2019/20 international season still in October, top Asian importers have already started to demand a lower volume of the commodity, such as China. One of the indicators of the decline in imports from China comes from domestic production, which in November reached 873.80 thousand tons, indicating an increase of 119.11% in the margin, compared to 398.80 tons in the immediately previous month. China’s production this year also shows a strong advance of 105.26% over the supply level of 425.70 thousand tons at the same time last year.
According to data from China’s Ministry of Agriculture, local production is expected to fall 2.4% from 10.76 to 10.50 million tons. The United States Department of Agriculture points to a slightly higher production, at 10.89 million tons, up 1.21% from the previous season’s 10.76 million tons. In this context of growing supply and with earlier than normal start of activities by local industries, imports have shown a narrow growth in the short term. In October, latest data available, China imported 450 thousand tons of sugar from the international market, up 7.14% from 440 thousand tons in the immediately previous month. SAFRAS & Mercado notes that, despite the decline in China’s GDP growth estimates, which in theory would imply a declining demand for international sugar, the trend of higher participation by China in India’s sugar demand is still valid, as India has a large volume of exportable surplus, stocks and domestic supply. This happens at the same time that China itself has invested in the domestic sugar production of both cane and beet since the previous year, which may put some limits on international sugar demand in the medium to long term, mainly from India.
In annual terms, the scenario shows a slight increase of 7.14% over the 420 thousand tons imported at the same time last year. With the October data it is possible to determine that during 2019 around 2.84 million tons of sugar were imported from China, indicating an increase of 22.68% compared to the 2.31 million tons imported from January through October. Moreover, the monthly average imports in 2019 ended at 284 thousand tons, which put October volumes 58.45% above the monthly average of 2019. It was also observed that the current volumes of 450 thousand tons ended up 69.01% above the 4-year average for the same period (266.26 thousand tons). This average fell 16.26% in the margin from 317.94 thousand tons to the current level of 266.26 thousand tons. It is interesting to note that, even with a 7.14% increase of imported volumes in the margin, the distance from the 4-year average fell in between September and October from 69% to 59%, even though the average itself also showed a decrease of 16%, as previously mentioned.
