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First, the price trend
According to the commodity market analysis system of the business community, the average price of domestic first-class white sugar was 6,704 yuan/ton on January 1, and the average price of first-class white sugar on March 25 was 6,748 yuan/ton, with a price fluctuation of 0.66% and an increase of 10.01% over the same period last year.
2. Market analysis
January (first up and then down and then up): at the beginning of the year, the downstream food industry in the sugar market just needed to replenish the main, due to the slowdown in the market, the superposition of the handover of the old and new crushing season, the new sugar listing expectations, in order to avoid the risk of falling prices, traders also generally maintained a low inventory state, low hoarding intentions, in the second half of the year with the arrival of the stocking period, white sugar transactions and prices.
February (volatile decline): During the Spring Festival, the market was suspended, sugar consumption entered the traditional off-season, sugar prices were sideways, and the market recovered slowly in late February, the transaction was weak, and the price fell weakly.
March (volatile rise): Due to the good sales rhythm of domestic sugar, the inventory of sugar factories is at a low level in the same period in history, the supply is declining, and the price of raw materials is rising, and the rebound of the external disk has driven the price of white sugar to rise.
Domestic fundamentals
On the supply and demand side: January is the peak production season, and as of the end of January 2024, a total of 5,867,600 tons of sugar were produced in the 2023/24 crushing season, an increase of 200,000 tons year-on-year. At the end of February, the cumulative sugar production in the 23/24 crushing season was 7.95 million tons, an increase of 30,000 tons year-on-year. Overall, the market supply side in the first quarter was relatively sufficient. On the demand side, due to the increase in pre-holiday stocking demand in January, the overall price of white sugar showed an upward trend, and as the demand turned in February, the price of white sugar fell.
Inventory changes: The inventory of the sugar industry in January was 2.7505 million tons, a year-on-year decrease of 550,000 tons, at the lowest level in the past five crushing seasons, which is also the main reason for the increase in sugar prices in January. As of the end of February, the inventory of the sugar industry was 4.17 million tons, a year-on-year decrease of 380,000 tons. In February, the inventory of white sugar industry was also at a low level in the same period, and the fundamentals had some support, but due to the closure of the Spring Festival, there were few transactions, and the price of white sugar fell.
Imports: From January to February 2024, China imported 1.1925 million tons of white sugar, an increase of 311,700 tons or 35.39% over the same period of the previous year, and an increase of 340,300 tons over the average of the same period in the past five years, the highest level in the same period of five years. Domestic sugar imports in January and February were in line with market expectations, but due to Brazil's low exports to China in February and the trend may continue in March, domestic sugar imports are expected to decrease sharply in March.
3. Forecast for the future
Abroad: the main producing countries in the northern hemisphere sugarcane crushing has come to an end, because India does not export sugar for the time being, so the main supply of international trade flow depends on Brazil, most countries have low inventories (except Brazil), and the price of raw sugar is expected to be supported around 20 yuan/pound.
Domestic: In the 2023/24 crushing season, the supply of domestic sugar market is relatively sufficient, and the overall inventory is low, but there is still a big gap in domestic sugar, and imports are still needed as a supplement, and the price fluctuation range of white sugar is expected to be 6500-6800 yuan/ton in the short term.