CHINA: Sugar futures soar on expected government stockpiling
Published: 08/16/2012, 7:22:24 AM
Sugar futures on China's Zhengzhou Commodity Exchange extended a sharp rally to a second day Thursday, as traders expect the government to soon start stockpiling sugar at above-market prices, according to Dow Jones.
The benchmark January contract closed the morning session up 2.8% at CNY5,582 (US$879) a metric tonne, the highest level in more than three weeks. The contract opened up 3.6%. It soared to its intraday upper limit of 4% Wednesday.
The government will stockpile another 500,000 tonnes of sugar at a maximum price of CNY6,550/tonne to help crushers, traders said.
The government completed stockpiling of the first batch of 500,000 tonnes in May.
The National Development and Reform Commission, China's top economic planner, met in Beijing Wednesday to discuss the details, traders said.
The official announcement is expected to come as early as Friday, and the stockpiling may start as early as next week, said Yu Zhonghua, an analyst with Essence Futures.
January futures have declined 16% since mid-April as a surge in imports and a domestic output increase in addition to weak demand weighed on prices.