China to curb sugar imports due to large domestic output

China will tighten controls on sugar imports in the crop year that started in October as higher domestic output and record stockpiles dampen the need for foreign supplies, officials said on Thursday. The government will also continue to buy sugar from the domestic market as it looks to support prices, said Liu Xiaonan, a deputy director with the country’s top planning body, the National Development and Reform Commission.

He did not give further details, but said state stockpiles would source large amounts of the sweetener from the domestic market over the 2012-13 period. “The supply pressure is huge, the government will continue its stockpiling policy, which will be implemented at the peak crushing season to protect the interests of farmers,” Liu said at a conference.

China is expected to produce some 14 million tonnes of white sugar in 2012/13, up around 22 percent from the previous year, as farmers increased planting areas and the crop benefited from good weather. “In order to control imports, authorities may reduce the import quotas usually allocated to state firms,” said a senior industry analyst who declined to be identified.

China typically issues a total of 1.945 million tonnes of low-tariff import quotas every year, of which 70 percent are allocated to state-owned companies. China’s sugar imports from October 2011 to September this year reached a decade-high of 4.26 million tonnes, said Yan Weimin, an official from the China Sugar Association, an industry body.

A Reuters poll showed in early October that Chinese sugar imports could drop by around half in the season to September 2013. Besides imports by the government for state reserves, Beijing has also stockpiled 1.5 million tonnes of sugar from the domestic market, leaving current state stocks at a record high of about 4 million tonnes, analysts estimated. NDRC’s Liu said the government would release the state stocks after the crushing season ends, normally in May.

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