In the world of cotton, China is well known for its massive government-run stockpiling program. This program, one aim of which is to keep prices inflated for Chinese growers, has led to uncertainty in the world market, and is compounded by other subsidies to its cotton farmers.
Seems China’s sugar sector is pursuing similar policies.
Just before the holidays, Bloomberg News reported that government-run sugar stockpiles in China have grown far larger than the market expected.
Brazil, the world’s largest sugar producer, is boosting shipments to China, fueling speculation that demand in the world’s second-biggest importer of the raw sweetener will exceed forecasts for a second year….
China brought in 3.8 million tons of raw sugar in 2012-13, estimates Kingsman SA, a unit of McGraw Hill Financial Inc.’s Platts. That’s almost four times the amount a U.S. Department of Agriculture unit forecast at the start of last season. Purchases beat estimates as a government stockpiling program attracted more shipments.
And now, It seems that additional Chinese government interference is forthcoming.
China may phase out its stockpiling program and partially replace it with direct subsidies to cane and beet farmers as early as the crop starting October 2014, Zhao Lihua, a director at the economy and trade division of the National Development and Reform Commission, said last month.
U.S. sugar producers support a global sugar market that is free of government manipulation, but they also believe that while such manipulation exists, unilateral disarmament of U.S. policy will not encourage a free market.