September 01, 2012: China’s sugar futures traded almost limit-up on the Zhengzhou Commodity Exchange in the country’s central region on Thursday, fuelled by fresh talk of a possible purchase by the government. Zhengzhou white sugar futures nearly hit the 4 percent limit up soon after the opening bell of the afternoon session, after having traded in a tight range in the morning.
The contract closed at 5,390 yuan per tonne, up 2.14 percent from Wednesday. Talk that the government might buy 500,000 tonnes of sugar in the domestic market drove sugar futures to their limit-up in mid-August but there has been no official confirmation.
“The sugar futures have been up and down these days, with talk of whether the government will buy or not buy leading the market in turns,” said Zhu Xiaoyan, an analyst with Tianma Futures Co. Traders said the state council could not make a final decision as government departments were divided over the details of the planned purchase.
Talk resumed in the afternoon that the government would buy new sugar in the coming crushing year, said a local reserve official, who declined to be named. But even if there were a purchase, it would not change the overall trend of falling prices, the official added. The market expects sugar output in the 2012/13 crushing year, which starts from October, to exceed the figure of 2011/12, which was 11.52 million tonnes according to the China Sugar Association.