China to Limit its Sugar Imports Despite Lower Production

Published 2022년 3월 18일

By the end of the 2021-22 campaign, a decline in sugar production in China is expected due to unfavorable agro-climatic conditions and the trend of farmers shifting from growing sugar cane to corn for better pricing returns. Both sugarbeet and sugarcane are likely to have low sucrose extraction rates and the overall production of centrifugal sugar production is expected to witness a YoY decline of 2%. Despite the lower production, China will not be increasing its volume of imports to meet the consumption demand, since the country imported significant sugar volumes in the 2020-21 campaign. The ending stock from the previous year is high enough to offset the decline in domestic production this year and meet consumer demands.

Based on the Global Sugar Market report released by Ragus, China’s sugar campaign for the year 2021-22 will be near completion by the end of March 2022. According to the report, the sugarbeet production is projected to be only 0.9 million mt, a YoY decline of about 67%. The cold weather in the autumn months affected sugarbeet development and reduced the yield of the crop. Even the sugarcane crop is projected to record a YoY fall due to wet weather in November. In addition to unfavorable agro-climatic conditions, many farmers have switched to growing corn for greater profitability. Overall, the sucrose content in sugarbeet and sugarcane was impacted during this campaign which reduced the overall sucrose extraction rates.

Source: USDA.Note: 2021/22* is projected.

The forecasted total sugar production for China stands at 9.9 million mt for the 2021-22 campaign. These figures are close to what USDA has projected for China’s overall centrifugal sugar production, which stands at 10.3 million mt, a YoY decline of only 2%. With sugar production anticipated to reach anywhere between 9-10 million mt, China’s sugar consumption is likely to be more than the production levels. USDA projects production to touch 15.8 million mt, closer to the 15.6 million mt estimated by Ragus. Considering that the sugar consumption will cross the production volumes, one would expect that the sugar imports of China will rise in the 2021-22 campaign. However, the projections and situation are very different in the case of China’s sugar market.

According to the National Association of Securities Dealers Automated Quotations (NASDAQ), China imported significant sugar volumes in 2020-21, which is much higher than the existing structural annual deficit of about 4.8-5 million tonnes. The ending stock from the previous year will be high enough to offset the decline in domestic production even this year. USDA projects that the sugar imports this year will only be 5 million mt, which is 16% less than the previous year. As such, China is likely to utilize the stock from the previous year. The outlook for China’s sugar imports remains positive for the coming few years. According to China's Ministry of Agriculture and Rural Affairs, it is expected that the import volumes will be elevated for the next 10 years, reaching 5.52 million mt in 2030, growing at an annual pace of 5.8%. The high level of sugar imports will be backed by China's increasing sugar consumption level, which is projected to reach 16.44 million tons in 2030.