Xin Hua Wang·2025-08-12 05:49Core Viewpoint - Sugar prices have surged significantly this year, with a 24% increase in the price of white sugar as of July 28, reaching 7160 yuan per ton, raising concerns about supply and demand imbalances due to the onset of El Niño [1] Group 1: Sugar Market Dynamics - The El Niño phenomenon may exacerbate supply-demand imbalances in the sugar market, particularly affecting sugarcane production in Guangxi, which accounts for approximately 60% of China's sugar production [1] - The domestic sugar production has faced challenges, with a reported decrease of 897.28 million tons in sugarcane production during the 2022/2023 season compared to the previous year [3] - The average annual sugar production in China is around 10 million tons, while consumption is approximately 15 million tons, indicating a demand gap that needs to be filled by imports [7] Group 2: Agricultural Adaptations - Farmers in Guangxi are proactively drilling wells to secure water sources for irrigation, with one farmer reporting a well drilled to a depth of 160 meters, capable of supplying 30 to 45 cubic meters of water per hour [2][4] - The implementation of advanced irrigation systems, such as dual-use spray and drip irrigation, is becoming more common among sugarcane farmers to enhance water efficiency [3] - The company is encouraging farmers to adopt water-saving practices and is providing subsidies for new well drilling to mitigate the risks associated with potential droughts [8] Group 3: Impact of El Niño - The World Meteorological Organization has confirmed the formation of El Niño conditions, which could lead to extreme weather patterns affecting sugarcane growth [5] - Historical data indicates that El Niño has resulted in increased sugarcane production in 6 out of 11 instances since the 1980s, suggesting that its impact is not straightforward [6] - The company is preparing for various weather scenarios associated with El Niño, including drought and excessive rainfall, by developing comprehensive emergency response plans [8][9] Group 4: Future Outlook - The company anticipates improved sugar production in the 2023/2024 season due to better growing conditions and enhanced agricultural management practices [9] - The rising sugar prices are expected to positively impact the overall profitability of sugar companies, as they adapt to changing climatic conditions and market demands [9]