China said on Thursday it would sell white sugar refined from its 200,000 tonnes of raw reserves in domestic market to help curb prices forced up by tight supply.
The National Development and Reform Commission, which monitors the domestic markets of key commodities, said a total of 184,000 tonnes of white sugar would be sold on January 5 and 16 to stabilise prices and meet strong demand ahead of the Lunar New Year.
The commission said last week it would release some 200,000 tonnes of raw sugar from its 1.1 million tonnes of reserves to hold down prices of the product, demand for which has been rising relentlessly in China. The bidding price for the white sugar was set at 3,800 yuan ($470.80) per tonne, said the commission.
Supported by strong world prices, Chinese refined sugar prices are close to record highs because a shortfall of cane has caused sugar plants in the south to delay crushing by about two weeks.
The crushing season in the south began in November. The shortage, particularly in the Guangxi region, has interrupted operation by some mills, said local industry officials.
Guangxi accounts for 60 percent of China's sugar output. They said farmers were reluctant to harvest more cane because they expected better prices to come.
Rain had also delayed harvesting. Meanwhile, some mills were speculating on higher prices by holding on to stocks of refined sugar. Farmers are also holding more cane for planting next year, which would likely lower the region's output for the year through to September, they said. The commission had not released enough stocks to make much difference, said one manager at a state-owned sugar firm in Guangxi. "Supply is pretty tight," he said. He expected the price of refined sugar to rise further to between 4,500 and 4,800 yuan per tonne from current 4,300 to 4,700 yuan, depending on location.
Beijing is planning to launch long-waited white sugar futures in January, possibly on January 6, to help firms hedge rising prices. High world sugar prices also discourage private firms from importing, industry officials said. Beijing has not issued import quotas for next year.
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