China sucks in Myanmar sugar

High demand from China is boosting Myanmar’s sugar exports, as world prices for the sweetener also increase on the back of forecasts of a global production deficit over the next two years.

Traders estimate about 100 trucks a day are crossing the Myanmar-China border carrying sugar. So lucrative is the business becoming that even rice traders are getting in on the action. Businesspeople also report imports of sugar from Thailand for re-export to China.

Demand in China for imports is increasing because its own sugar production has fallen, with fields given over to what had been more competitive crops. Landlocked Yunnan province is also forced to pay a premium for sugar, with traders citing a mid-price of some 5200 yuan (US$795) a tonne for refined sugar, about double current international prices.

“Every trader is coming to export sugar to China. Even rice exporters come to the market. Well-connected merchant get sugar permits and they import sugar from Thailand and then export to China,” said U Win Htay, deputy chair of the Myanmar Sugar and Sugar Related Products Merchants and Manufacturer’s Association.

He said he had been told that sugar import permits were not available but that he was selling locally produced sugar to China and had already exported 700 tonnes this year.

Myanmar’s annual sugar production is about 400,000 to 500,000 tonnes. But because of a cycle of declining prices in recent years, acreage had fallen and production had dropped by 25 to 35 percent.

“Starting from December sugar factories are on a run,” he said.

Myanmar exported about 100,000 tonnes of sugar to China in 2013 but exports collapsed in 2014 when China turned to Vietnam for its imports. However, since April 2015 the trade has rocketed again with an estimated 200,000 tonnes exported up to the end of 2015.

Global market analysts at Kingsman forecast a supply shortfall in the current 2015-16 crop year, which started in October, for the first time after six years of surpluses. A shortfall is also expected in the following season.

Source: Myanmar Times

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