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With the coronavirus now contained in China, the Chinese government is unlocking the country and taking measures to encourage domestic sugar consumption; the pandemic continues to expand outside China and its dark cloud is still over global economy.
As of 30^th March, Guangxi, China’s top sugar producing region, finished crushing, with a total production estimate of 6-6.1m tonnes; down 300k tonnes year-on-year (YoY).
With the cane subsidy policy in Guangxi and high beet price in Inner Mongolia, we expect sugar production to grow in 20/21.

Market News

Physical & Futures Prices

Last Friday, the No.11 raws settled at 11.1 c/lb, up 1.74% from the previous week.
The ZCE main contract settled at 5465 yuan/mt; this is the same as the previous week.
The average price of Guangxi was 5649 yuan/mt, up 9 yuan/mt from the previous week; the physical premium is at 184 yuan/mt.

Guangxi 19/20 Sugar Production & 20/21 Forecast

Guangxi finished 19/20 crushing on 30^th March and the final sugar production could be in range of 6-6.1m tonnes.
We think 20/21 cane acreage could stay strong and sugar production could recover to above 6.3m tonnes with normal weather.
So far, the sugar sales in March were not good due to the impact of COVID-19; this means mills may lower prices to make sales.

Imports and Refining

The main refineries have started operating again and they are mainly processing the Cuban raws which were rotated in Dec’2019.
The quota and AIL have been issued and we think refineries will start to build up stocks, incentivised by the low prices.
Sugar could gradually arrive in China from April but they should be customs-cleared after 22^ndMay to avoid safeguard duty.
In January and February 2020, China imported 324k tonnes of sugar with 269k tonnes raws and 55k tonnes of whites.

Rosa Li

Rosa graduated from Jinan University in 2012 with a bachelor’s degree in Marketing. Rosa joined CZ in 2014 and has been an analyst for 7 years in our Guangzhou office managing the data capture, analysis and visualisation within the Chinese sugar markets utilising her skills in SQL, Python and VBA while also providing content for our platform CZ App. Rosa is also responsible for the localization of CZ App in China – CZ App WeChat, she also assists with the commercial marketing in China and works towards strategy with the trading team.