China is likely to export 200,000-300,000 tonnes of white sugar to Southeast Asia in the current marketing year to take advantage of higher international sugar prices, a senior industry official said on Thursday. China's sugar output is likely to fall below 11 million tonnes because of a drought, while demand is seen exceeding 14 million tonnes in the year ending September, Liu Hande, Vice Chairman of the China Sugar Association, told Reuters.
"We expect there will be a bigger shortfall at home this year and supplies are quite tight," said Liu, even though the government still holds about 1.74 million tonnes of sugar reserves after releasing 860,000 tonnes. Beijing released the 860,000 tonnes from reserves to cool down runaway domestic prices ahead of the Lunar New Year holidays, capping price rises at home but also benefiting exports.
"Some companies have been exporting for a while. For the whole country, exports could reach 200,000 tonnes to 300,000 tonnes for the year," said Liu. He said companies earlier sold sugar at about $730 per tonne. Despite 400,000 tonnes of imports from Cuba under a bilateral agreement, rising exports could tighten supply and prompt China to import later, added Liu.
China, a net sugar importer, exported 63,886 tonnes and imported 1.06 million tonnes in 2009, according to Customs figures. China's sugar prices are about 2,000 yuan ($293) per tonne cheaper than world prices, which have surged to 29-year highs over tight global supply, analysts estimated.
"On the one hand, the government is releasing sugar reserves to curb price rises, while on the other hand, high profits are driving enterprises to export," said Xiong Zijing, an analyst with Galaxy Futures Co Ltd. Companies have exported about 100,000 tonnes of white sugar over the past few weeks to Indonesia, said another trader in Guangxi.