Sugarcane prices increase at the beginning of the crushing season.

At this point, many sugar factories have begun their 2016/2017 production season. Notably, the sugarcane prices applied by the factories at the beginning of the season are significantly higher than in the same period last year.

According to the Vietnam Sugar Association, due to unusual weather and flooding conditions in the Mekong Delta, many factories started their 2016/2017 crop year late. Some factories started on schedule but could not operate continuously as planned.

By this time, most sugar mills in the Mekong Delta have started their crushing season, with only the Tra Vinh sugar mill starting in early December.

The prices at which sugar factories are purchasing sugarcane are quite good. In the Mekong Delta, factories in Phung Hiep, Vi Thanh, Ben Tre, and Soc Trang are buying sugarcane at the field price of 1,040 VND/kg (10 CCS).

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In the Southeast region, the purchase price of sugarcane at the field applied by the Nuoc Trong sugar factory is 1,000 VND/kg. Compared to the beginning of the 2015/2016 crop year, the price of sugarcane at the beginning of the 2016/2017 crop year in the Mekong Delta is about 80-90 VND/kg higher. And if compared to the price of sugarcane throughout the 2015/2016 crop year, which ranged from 950-1,050 VND/kg, the price of sugarcane at the beginning of the 2016/2017 crop year is approximately equal to the highest price of the entire previous crop year.

The high purchase price of sugarcane is due to the relatively good price of sugar. While in November 2015, the wholesale price of refined white sugar was around 14,000 - 15,000 VND/kg, the wholesale price of refined white sugar in mid-November 2016 was around 17,000 VND/kg.

High domestic sugar prices are significantly influenced by the global sugar market. White sugar prices on the London market are currently above $500 per ton. The latest forecasts suggest that the sugar deficit in the 2016/2017 crop year will not be as severe as previously predicted.

Specifically, according to Datagro's forecast, the global sugar deficit for the 2016/2017 season will decrease from 8.62 million tons of crude to 6.48 million tons. This scenario is based on the prediction that sugar production in South-Central Brazil will increase after the production season begins in April. However, with a projected deficit of 6.48 million tons, world sugar prices are likely to remain high throughout this season.

Therefore, domestic sugar prices are expected to remain high in the coming months. According to Mr. Nguyen Hai, General Secretary of the Vietnam Sugar Association, domestic sugar prices are unlikely to fall below current levels in the near future.

If so, the purchase price of sugarcane at the farm gate in the Mekong Delta will remain above 1,000 VND/kg. This price ensures benefits for both farmers and factories. And it is highly likely that the price of sugarcane throughout the 2016/2017 crop year will be higher than in the 2015/2016 crop year.

In terms of production, due to the relatively small number of factories that have started their production season, the sugar output at the beginning of the 2016/2017 crop year is still quite modest.

As of November 18th, sugar mills had processed 475,130 tons of sugarcane, producing 39,307 tons of sugar. Total sugar inventory at mills as of November 18th was 132,936 tons, while inventory at trading companies was 6,377 tons. The Vietnam Sugar Association affirms that with the above inventory levels, combined with sugar production in the remaining months of the year, there will be sufficient supply to meet domestic demand during the 2017 Lunar New Year.

According to Tran Thanh/nongnghiep