Supply and demand imbalance to suppress sugar prices

The current global oversupply has become the sword of Damocles that suppresses the price of sugar at home and abroad. The world's major institutions continue to raise the global sugar supply surplus in the 2017/2018 crop season. Both domestic and international sugar prices have fallen back, of which Zheng sugar has hit a year and a half. New low left and right. Analysts pointed out that the domestic sugar market will enter the low season of consumption, the driving force from the demand side will still be insufficient, and the external market price gap will also be dragged down by the domestic market, and the space above Zheng sugar is limited.

Oversupply of suppressed sugar prices

Since late January 2018, the price of sugar in the bear market has entered a narrow range of shocks for more than a year. From January 18th to February 27th, the main sugar 1805 contract rose slightly by 0.02%. In the same period, international sugar prices also performed similarly, with ICE11 sugar falling slightly by 0.67%. Throughout 2017, Zheng sugar fell by 14.16%; ICE11 sugar fell by 22.82%.

On the international front, Thailand and India, the main producing countries in the northern hemisphere, are making great progress. According to the current progress of crushing production, Thailand's 2017/18 crop season sugar production is expected to reach a high level of 12 million tons, while the Indian Sugar Association may produce 2017/18 crop season. The estimate is further raised by 26.1 million tons last month. Currently, more optimistic international institutions have raised India's production estimates to 28-8 million tons. The Indian sugar factory is asking the government to reduce the sugar export tariff to zero. Indian sugar association officials expect India to export 1.5 million tons of sugar in the next 6-8 months.

Fang Huiling, a senior researcher at Dongzheng Futures, said that the global sugar supply surplus in the 2017/18 crop season is still likely to increase further, while India's production in the 2018/19 crop season may continue to increase, or will offset the Brazilian sugar mill's new cropping season. The production of ethanol will reduce the production of sugar. The global sugar supply in the 2018/19 crop season will continue to be excessive. At present, the progress of the hedging in the main producing countries is also slow, and the pressure on the outer disk is still heavier. It is more difficult to continue to rise. However, the Brazilian sugar alcohol conversion equilibrium price is much higher than the sugar price, and the production cost of Brazil 13-13.5 cents still has a strong support for the price.

Cinda Futures analyst Zhang Xiufeng said that the global oversupply made the raw sugar in the bottoming process. Since the end of 2017, the world's major institutions have continued to raise the global sugar supply surplus in the 2017/2018 crop season, and the raw sugar is still in the process of bottoming out. Domestically, although the import tariff has been raised, the internal and external price difference is above 1,000 yuan/ton, and the implementation tax rate is lowered year by year. Overall, the average selling price of sugar in the next two years should be lower than one year.

Still in a bear market

According to Cinda Futures data, as of the end of December 2017, the country has accumulated a total of 2,325,600 tons of sugar, an increase of 27,000 tons over the same period of the previous year. The cumulative sales of sugar was 1,038,300 tons, down by 128,800 tons from the same period of the previous year.

Zhang Xiufeng said that in the case of the mining season in Guangxi, the country's total sugar production was slightly higher than the historical period, but the decline in sales of new sugar was intriguing. On the one hand, the inventory of sugar in the last season is sold at a low price. On the other hand, the alternative fruit fructose syrup development momentum is fierce. At present, most beverage manufacturers add a large amount of syrup to reduce costs, although the beverage manufacturers started in January. The rate is higher, but the amount of white sugar used is not large, and the demand for sugar is difficult to reflect.

"The domestic sugar market has entered the low season of consumption, and the driving force from the demand side will still be insufficient. Under the huge internal and external price gap, the external disk weakness will also drag down the domestic market, and the space above Zheng sugar is limited." Fang Huiling said.

Fang Huiling pointed out that after entering March, the amount of sugar mills will gradually increase, the crushing peak will gradually pass, and the pressure on funds will be reduced. Zheng sugar is unlikely to fall sharply in the short term, and the fabrics are mainly shocked. But in the long run, inside and outside sugar is still in a bear market.