Showers earlier this week failed to end lingering drought in China's top sugar region of Guangxi, which produces about 60 percent of the country's total sugar output, local agriculture officials said on Friday. "We have some rains, but only in parts of the region. Some areas do not have enough and canes have already withered," one official with the Guangxi agriculture bureau told Reuters.
The official declined to estimate the losses to sugar output, but said the region has been suffering dry weather since May, and in some areas the drought situation was very serious. Drought, which has interrupted drinking water supplies for 150,000 people in the region, would continue for another week, the official Xinhua new agency said, citing weather bureau.
"We don't expect the rains (earlier this week) could help much, sugar cane there has been growing much lower than in normal years," said Zhang Xiangjun, an analyst with Beijing CIFCO Futures. China has been increasing sugar imports to help cover a deficit and replenish its already-low state reserves. A lower output in Guangxi would likely widen the country's deficit in 2011/2012. Some analysts already expect a shortfall of at least 2 million tonnes in the year.
Zhengzhou front-month white sugar future prices eased to trade at 7,600 yuan ($1,189) per tonne on Friday, down from a record 7,948 yuan ($1,243) on Wednesday after Beijing released the second batch of state sugar reserves. Food processors have also slowed down purchases after they completed a stock built-up ahead of traditional holidays next month.