Rising sugar prices ferocious sugar companies operating at a loss

Since the country took control, the price increase has achieved phased results. However, recent commodity prices have rebounded. For example, sugar futures prices have recently reappeared ferocious gains and approached historical highs.

What is the fundamental cause of the current price increase? "Unbalance between supply and demand"? "Intermediate markup"? "What about hot money speculation?"

The reporter conducted an in-depth investigation of a sugar factory in Guangxi and tried to provide a reference sample for exploring the underlying causes of the renewed high price of sugar.

On January 21st, the domestic sugar futures contract of 1105 closed at 7142 yuan per ton, again approaching the record high of 7,239 yuan per ton set in early November 2010. At the same time, the wholesale price of sugar has been operating at a high level recently, and the retail price has also risen.

Since August 2010, the domestic price of sugar has entered a soaring passageway, and the tiny white sugar has become a “sugar sect” and has not yet been “abated”. What are the reasons for the high price of sugar? "The theory of supply and demand imbalance," "intermediate fare increase," "hot money speculation," and other arguments are all over the sky. To this end, the reporter went to Chongzuo City, Guangxi Province, China, the "sugar capital," which accounts for 20% of the country's total sugar output, to investigate Xianggui Sugar Factory.

Chongzuo City's Jiangzhou District ranks second in the city's annual sugar output, and the average per capita cane yield and per capita sugar production ranks first in Guangxi and even in the country. Xianggui Sugar Factory is located in Xinhe Town, Jiangzhou District. With its ability to squeeze 12,000 tons of sugar per day, the sucrose industry in Jiangzhou District occupies a pivotal position.

If the price of high sugar is only speculators, then the price should be lowered after the new crop has been squeezed. In fact, there is no higher sugar price. The outsiders think that speculators have gone up. “I think we cannot attribute the rise in sugar prices to speculators.” Zhu Guangcai, general manager of Xianggui Sugar Factory, said, “At this price, everyone agrees and conducts transactions, indicating that this price reflects the value of sugar to some extent. ”

Since October last year, Chongzuo's major sugar mills have successively squeezed and new sugar has continued to enter the market. According to Yunnan Sugar Net's "CSI domestic sugar spot price index" shows that since November 10, 2010 hit a record high of 7517.62 yuan / ton, the domestic spot price of sugar has been in the 6900 to 7200 yuan / ton.

"If the high sugar prices are only speculators frying out, then after the new press season, the price should be down. In fact, no." Zhu Guangcai said.

Each year of the sugar mill's crop season is a cross-year, from the first year of October to April of the following year, and sugar is generally sold until October of the following year. “From the end of August to October, when sales enter the final stage, everyone has no sugar in their hands. The price of sugar is soaring at this time. It is understandable. But it is still around 7,000 yuan. It shows that sugar is indeed a gap between supply and demand. It is not simply The price was raised." Zhu Guangcai analysis.

Last year, Guangxi suffered a drought. The sugarcane production in Chongzuo City was affected and the sugar mills were inevitably implicated. In the 2009/2010 crop season, Xianggui Sugar Factory cut its output by 18% compared with the previous crop season.

In addition to the supply-demand relationship, the increase in the cost of sugar production is the driving force behind the high price of sugar. "This year's skyrocketing prices have raised costs in all aspects. As far as the sugar industry is concerned, the cost of sugar cane has risen, the cost of machinery and equipment in sugar mills has risen, and the cost of employing people has increased. Can you say that sugar prices can rise?" Zhu Guangcai said.

High-sugar price sugar companies are operating at low profit margins, and sugar companies benefit most? Zhu Guangcai expressed disagreement. He gave reporters a few figures: According to the standard calculation of 8 tons of cane to squeeze 1 ton of sugar, the price of sugar rose by 100 yuan, the income of the farmer accounted for 48 yuan, and the tax revenue accounted for 23 yuan. .

At present, sugar sugar cane purchase prices in Guangxi sugar companies implement a sucrose hooking linkage system. The sugarcane sugarcane purchase reserve price, sucrose hooking price, and linkage settlement method shall be uniformly formulated by the competent price department of Guangxi on the basis of fully listening to the views of the governments of various localities, the sugar industry, the sugar industry, the representatives of sugarcane farmers and other parties. This year sugar cane purchase reserve price is 350 yuan / ton, once the sugar price is bullish, companies have to be based on the market to increase the "money" to farmers. After the sugar factory opened last year, the price of sugar soared to the highest point: 7517.62 yuan/ton. At the end of November, Guangxi's price department made the first linkage settlement of sugar cane purchase price and raised it to 410 yuan/ton. To this end, for every ton of sugar cane, the Hunan Guigui sugar factory must supply 60 yuan to the sugarcane farmers.

Zhu Guangcai calculated a cost account for the reporter: When the price of sugar is around 5,000 yuan/ton, the basic production cost of sucrose is between 3,600 and 3,700 yuan/ton, plus taxes, inventory costs, logistics costs, and support for roads and seeds. The total cost of sugarcane farmers has reached 4,500 yuan/ton. Now that the prices have risen, the increase in all aspects of the cost has continued to “add up” the total cost of sugar – the price of sugar has risen to 7,000 yuan/ton, and the cost has risen to 6,000 yuan/ton. The cost of sugar production has risen faster than the rise in sugar prices, and sugar mills are still operating at low profit.

"The price is even higher, and the sugar factory is not the most profitable party. There are also a lot of benefits for sugarcane farmers," said Zhu Guangcai. From the perspective of sustainability and scientific development of sugar cane, sugar mills also hope that sugarcane farmers benefit, and farmers' sugar cane land is the first workshop of the sugar mill. How can a sugarcane farmer directly affect the sugar mill?

Xinhe Town, Jiangzhou District, Chongzuo City, the villages and villages all have cement roads. This is mostly the credit of the Xianggui Sugar Factory for the convenience of transporting raw sugar cane carts. In the sugarcane planter's cost of planting sugar cane, Xianggui Sugar Factory also gave many subsidies, such as the need for mulch filming, 30 yuan per mu subsidy, fertilizer 70 yuan per mu subsidy, machine farming is 80 yuan per mu. Zhu Guangcai said that the sugar mill will invest more than 10 million yuan this year in subsidies for sugarcane farmers, including construction of water conservancy facilities.

The high sugar price is actually a warning signal. The country should raise the sugar reserve to the height of strategic reserves, and it should also properly subsidize the sugarcane farmers. For the reduction of sugarcane production, aside from the impact of climate factors, there is also a part of the reason is the reduction of planting area. In the large field opposite the sugar factory, the former was planted with high and homogeneous sugarcane. Now it is replaced by watermelon, cassava and other cash crops.

Sugarcane production in the new crop season is expected to be more than in the previous year, but the sugar content in sugar cane is not high, and no more sugar can be extracted. With regard to the trend of sugar prices this year, Zhu Guangcai predicts that this year's sugar cane may increase production, but sugar may not necessarily Increase production.

For the increase of cost, sugar cane has the greatest "contribution". Zhu Guangcai said: “Because the sugar yield has decreased, at this time in previous years, 8 tons would squeeze a ton of sugar. Now it takes 10 tons to squeeze out a ton of sugar. This part of the increase in costs is most obvious.”

In the 2010/2011 crop season, the sugar extraction rate of sugarcane in Chongzuo City was 0.4% lower than that in the previous crop season. According to the situation in previous years, the sugar cane of Chongzuo has a sugar yield of 12.5% ​​to 12.8%. "This is a very low rate of sugar." Zhu Guangcai said. Chongzuo estimated that the city's sugar cane output will reach 20 million tons this year, and a 0.1% drop in the sugar yield means that it will produce 20 tons less sugar.

Sugar cane has a low sugar content, which leads to a low sugar yield, and the culprit is “God.” According to the introduction of local sugarcane farmers in Xinhe Town, in order to have a high sugar content in sugarcane, one must have sufficient sunlight and the other must have enough rainwater. However, these two conditions were not met in 2010 when disasters frequently occurred in Guangxi. In the first half of last year, Guangxi suffered a rare drought and was hit by floods in the second half of the year. At present, it is also facing a frost disaster. The production of sugarcane is cyclical, and the impact of unfavorable climate factors on sugarcane growth last year is expected to continue.

“The output of sugarcane in the new crop season is expected to be higher than that of the previous year. However, the sugar content of sugar cane is not high and it does not produce more sugar. It is like a person who is sick and wants him to return to his illness before a short period of time. This requires a process,” Zhu Guangcai said. “The current freezing rain and snow conditions have a great impact on sugar cane.” After the sugar cane is frozen, the sugar contained in it will turn into alcohol over time. Sugar in this crop season may not be able to increase production, and there is a large supply and demand gap in the country, which may help the sugar price to continue to operate at a high level in the future.