Porto Alegre, April 28th, 2025 – The USDA’s first 2025 biannual report on global sugar supply and demand is only scheduled for the end of May, however, local USDA attachés have brought forward data from some selected countries, offering a preview at the end of April of the official data to be published only at the end of May. It is in this context that we have the data from China from the USDA on the outlook for the new crop, 2025/26. It is therefore possible to observe an ever-growing supply of sugar by China, which is expected to rise by 4.55% or 500 thousand tons between the 2024/25 and 2025/26 seasons.
This may seem like modest growth, but the big detail lies in the absolute volumes. If we look at the last 11 years of historical data, we can see that the 10-mln-ton mark has been a major limiting factor for the country’s supply, with production sometimes marginally exceeding that scale. However, in the 2024/25 crop, China had already broken this level with a production of 11 mln tons. Even so, USDA data on the future 2025/26 crop point to higher volumes, in the range of 11.5 mln tons.
According to USDA, this supply growth is directly related to the increase in the area planted with cane, combined with favorable weather conditions for developing these crops. As a result, China’s cane production will rise from 7.50 to 8.20 mln tons, while beet production will remain at 11.40 mln tons.
Another important detail that SAFRA & Mercado draws special attention to is the change in the Chinese government’s stance regarding the country’s import flows. Since last year, a stance has been adopted to reduce as much as possible the levels of processed sugars such as sugar syrup and those prepared with pre-mixed sugar. These products have intermediate levels of industrialization that the Chinese government tends to avoid for all products, including sugar, under a local strategic concept of the least possible dependence on foreign industry.
The result is a decline in imports of these two products with an increase in the demand for imports of VHP sugar (which is raw sugar without a high level of industrialization in its process) so that sugar syrups and pre-prepared mixtures can be produced within the country. This explains why China also has prospects for an increase in its imports of VHP sugar from the international market while domestic supply shows its highest growth levels in 11 years.
According to USDA, China’s sugar imports should grow from 5.0 to 5.3 mln tons between the 2024/25 and 2025/26 seasons, up 6.00% or 300 thousand tons. Besides the supply growth of 500 thousand tons, China is expected to see an increase in its domestic supply of new product of 800 thousand tons.
This will more than offset the growth in China’s domestic demand, which will increase by 100 thousand tons, or 0.64%, from 15.60 to 15.70 mln tons between the 2024/25 and 2025/26 seasons. SAFRAS & Mercado points out that this pattern of moderate growth in domestic demand is normal, since sugar is a commodity with inelastic demand, which responds more to a country’s population growth than to income growth, in this case, GDP.
Another important point that helps explain the increase in both exports and supply amid weak growth in demand is the issue of the balance between local supply and demand. This is because between the 2024/25 and 2025/26 seasons, this balance is expected to go from a deficit of 4.60 to 4.20 mln tons. On the one hand, we have a reduction in the deficit scenario of 400 thousand tons, with an 8.70% decline in the deficit between supply and demand, but, on the other, the effective deficit scenario remains above the level of 4.00 mln tons, which concerns the country’s government.
Not to mention that there will be significant increases in both ending and beginning stocks, which will boost the stock/consumption ratio. China’s beginning stocks are expected to grow by 190,000 tons, or 13.74%, from 1.38 to 1.57 mln tons, while final stocks will increase even more, by 1.01 mln tons, or 64.2%, from 1.57 to 2.58 mln tons, which will drive the stock/consumption ratio from 10.08% to 16.45%, up 6.37% between the current 2024/25 crop and the future 2025/26 crop.
