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China’s most-traded sugar futures contract on the Zhengzhou Commodity Exchange, for July delivery, gained more than 3% to hit 6,722 yuan per tonne at one point, marking the highest level so far this year.
According to calculations by Xinhu Futures, China’s is expected to see more than 5 million tonnes of gap in domestic sugar supply in the current crushing season, and if excluding carried-over stocks and quota-based imports, at least 3.2 million tons of quota-free imported sugar are needed to supplement domestic supply.
Without policy intervention by releasing sugar reserves, the import window will only open once the price difference between domestic and foreign markets is restored, it said.
In the medium term, there is still significant upward potential for sugar futures before Brazil’s sugar is exported in large quantities, and in the short term, as sugar prices rapidly rise, there may be increasing policy regulation risks, and from a technical standpoint, the market has entered the overbought zone, it said.
