China may sell sugar from its state reserves as a crackdown on smuggling limits supply in the world’s second-biggest consumer, according to an industry group.
Between 300,000 and 500,000 tonnes could be released as early as October due to expectations of tight domestic supply, Liu Hande, vice chairman at the China Sugar Association, said in a telephone interview on Tuesday.
As much as 2 million tonnes of sugar could be offered from reserves in the 2016-17 season starting next month, he said. Stockpiles are currently about 7 million tonnes, according to Liu.
“To ensure supplies, the government has to release 2 million tonnes of reserves next crushing season and the same volume could be released during 2017-18,” said Liu. The government may need to keep 3 million tonnes in stockpiles to help cover any shortfall amid surging global prices and a possible deficit in the global market, he said.
The government’s most recent sale of stockpiled sugar was in the 2012-13 season, when it sold about 165,000 tonnes. It sold 1.87 million tonnes in 2010-11, according to Liu, who is also the head of the industry association in the southern province of Guangdong. China has sought to crack down on unofficial imports and smuggling in major border areas has stopped after a year-long effort, Deng Yi, Chairman of Yunnan Sugar Association said last month.
An official at the China Merchandise Reserve Management Center, which manages state sugar stockpiles, declined to comment. The Commerce Ministry didn’t immediately respond to a fax seeking comment on possible sales.