2013 World Agricultural Outlook Conference Forecast of China s Sugar Market Xue Xu 徐雪 Research Center for Rural Economy xuxuercre@sina.com 7 June, 2013
2013/6/9 2 Key Messages 1. China s sugar production and consumption 2. World s sugar market 3. China s sugar price - Why is it falling below production cost? 4. Forecast and conclusion
1. China s sugar production and consumption The 4 th largest sugar production country after Brazil, India and EU27. The 3 rd largest sugar consumption country after India and EU27. 2013/6/9 3
China s Sugar Production and Demand Unit: 10 thousand tons 2012/2013 Crushing Season: Sugar output: 13.3 million tons Consumption: 13.5 million tons Basic balance in production and demand 2013/6/9 4
World Sugar Market Beginning Stocks Total Sugar Production Total Imports Total Supply Unit: 1,000 metric tons, raw value Total Exports Total Use Output exceed Consumption Ending Stocks 2008/09 43,389 143,888 43,802 231,079 46,689 153,857-9,969 30,533 2009/10 30,533 153,517 50,446 234,496 50,620 154,871-1,354 29,005 2010/11 29,005 161,762 50,399 241,166 55,585 155,513 6,249 30,068 2011/12 30,068 172,148 50,266 252,482 56,140 160,134 12,014 36,208 2012/13 36,208 172,310 48,538 257,056 55,144 163,614 8,696 38,298 Source: USDA, FAS, PSD online, 12/21/2012 2013/6/9 5
Price of Sugar #11 of ICE Unit: cent/pound 17.2 cent/pound RMB 2400 Yuan/ton 2013/6/9 6
Domestic sugar price Unit: RMB Yuan/ton 2013/6/9 7
Why China s sugar price is constantly falling? 2013/6/9 8
Domestic and world sugar price Unit: RMB Yuan/ton 2013/6/9 9
China s Domestic sugar output and net import Unit: million tons 2013/6/9 10
China s Sugar Import 2011/2012: 4.26 million tons 2012/2013: 2.5-3 million tons 5-6 million tons of state inventory Serious over-supply Ideal inventory: 3.38 million tons Decline of sugar price 2013/6/9 11
Why China is buying so much world sugar? World sugar price is much lower than that of China China s sugar producing cost is among the highest in the world. China s low protection level. China: 5800 Yuan/ton Brazil: 2500 Yuan/ton 15% tariff within import quota(1.945 million tons); 50% tariff beyond quota 2013/6/9 12
Outlook and conclusion 2013/2014 Domestic market: Stable production Low Price 2013/6/9 13
2013/2014 Global Market: Output: 177.015 million tons; Consumption: 172.424 million tons Sugar production will be 4.591 million tons more than consumption. Although the production will be decreased, the surplus will continue increase the world sugar stock. World sugar price : 16-20 cent/pound 2013/6/9 14
Long term projection to 2020 Global sugar consumption : 201 million tons; China s sugar consumption: 22.1 million tons; Gap in production and consumption: 5 million tons China s sugar imports will continue to increase 2013/6/9 15
Policy options: Encourage the transfer of sugar crop field, and develop appropriately scaled operations; provide socialized services during the process of seeding, plowing, transporting, selling, to reduce costs and enhance efficiency. Provide more support to sugar crop farmers to stabilize the interest of farmers, and increase the security of sugar industry. 2013/6/9 16
Thank You!