THE country’s top sugar growing region, Guangxi Zhuang Autonomous Region, said it had increased cane prices by at least 10 percent in the 2015/16 season, a move that may encourage slightly higher production next season.

    Sugar output in China, the world’s top importer, can have a significant impact on global trade of the sweetener.

    Expectations of lower output this year have supported domestic prices, widening the gap with the global market, and spurring large import volumes.

    Farmers in southwestern Guangxi, one of China’s poorest regions, grow about two-thirds of the country’s cane crop each year, but planted acreage fell by 12.5 percent this year as farmers switched to more profitable crops.

    Cane prices of 440 yuan (US$68.99) per ton for 2015/16, up from last year’s 400 yuan, could see farmers plant more cane next year, said analysts.

    “They will grow more cane next year because the price of other crops has also dropped,” said Zhan Xiao, an analyst at Xinhu Futures, noting that tangerine prices are lower this year compared with last year owing to surplus production.

    Corn prices are also lower after the government cut its support price for growers.

    The cane price can fluctuate by 10 yuan, said the Guangxi local government in a notice published on trade website GSMN.com. Zhan said many mills will be forced to pay as much as 450 yuan per ton because of the small cane crop this year.

    But labor costs will also rise, eroding some of the benefit to growers, he added.

    “Growers may plant a little more but not too much more,” said a trade source, who declined to be named.

    Analysts expect the Guangxi region’s sugar output to drop to around 5.5 million tons from more than 6 million tons last year.

    Total Chinese sugar production is forecast to fall to 9.3 million tons in 2015/16 from 10.6 million tons in 2014/15, according to Green Pool Commodities.(SD-Agencies)