October 12, 2007
Sugar glut causes prices to plummet
Sugar prices have been falling consistently on Vietnam's market due to an oversupply since hitting a record high of US$487 a tonne in May last year.
The Vietnam Sugar and Sugarcane Association (VSSA) said that 37 existing sugar plants have a total daily production capacity of 96,300 tonnes of sugarcane to produce 1.42 million tonnes of sugar, enough to meet local demand.
Globally, sugar yield is at a record high of 169 million tonnes for the 2007-2008 crop, two million tonnes higher than last season with India being the leading producer followed by Brazil and Thailand.
The International Sugar Organisation (ISO) predicted that the global supply would exceed demand by 10.8 million tonnes for the season ending in September 2008.
The oversupply has pulled down sugar prices from last year's record high of $487 a tonne for refined sugar to the current $265-270 a tonne though it had earlier inched up by $20-30, ISO reported.
Vo Van Quyen, deputy head of the Ministry of Industry and Trade's Policy Department, said the fall in local sugar prices was apparently due to the sector's weak integration into the global market and an irrational pricing system, which usually sets prices high at the beginning and drops them down very low towards the end of the season.
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