Domestic Sugar Industry Subject to Pressure after Expiry of protection Measures in Sugar Trade

(1) By May 22^nd,  the three years duration protection measures for sugar import expired. China’s tariff rate for extra-quota sugar import will be restored back to 50%. The expiry of the protection measures has conspicuous impact on domestic spot price. Regarding spot trade, spot price in Liuzhou and in Nanning continue to slide. Regarding future price,  trading price for contracts in 2009 fell to a new low of 4938 on 22^nd. The plummeting price can be mainly attributable to the following: a) after the expiry of protection measures for trade domestic sugar will be subject to impact from cheap sugar from overseas; b) due to impact from Covid-19 crisis, sugar consumption withered. Coupled with the expiry of trade protection measures, views on market trend are generally negative. After import tariff rate is restored back to 50%, despite various control policies, the impact from cheap imported sugar on domestic market cannot be neglected. China’s sugar industry will have to grow under pressure.
 
(2) Sugar output in April totaled 10.2098 million tons, a year-on-year reduction of 4.42%. Sales of sugar totaled 5.5277 million tons, down by 4.19% year on year. Cumulative sugar rate was 54.14%, while industrial stocks totaled 4.6821 million tons, down by 4.68% year on year.
 
（3）Sugar price dropped by 2.32% from the previous month. Sugar price of current month continues a slight slide mainly due to impact from Covid-19 and the expiry of protection measures in import trade, sugar consumption of this crushing season is not optimistic. This combined with the expectancy of the increase of cheap sugar import, sugar price will probably remain sluggish.