Vietnam's sugar prices likely to decrease

The price currently stands at VND24,000 ($1.20) per kilo, up roughly VND3,000-VND4,000 against September.

Deputy director of BigC supermarket Nguyen Thai Dung said consumers had rushed to buy sugar for VND19,400 per kilo at the government price stability retail outlets over the past few days.

General director of the Bourbon Tay Ninh Sugar Company Pham Thi Thu Huong said sugar producers had not expected the sudden rise as the wholesale price remained around VND18,000 per kilo and demand had not increased.

Sugar demand often increases in November and early December when confectionery makers start production for the Lunar New Year festival.

Huong attributed the price rise to psychological factors.

Echoing Huong, chairwoman of Bien Hoa Sugar Company Pham Thi Sum said Bien Hoa's sugar provision to the market remained the same as in previous months.

Industry insiders admitted there was a difference between sugar supply and demand, but it was insignificant. Therefore, the price hike was unreasonable, they said.

Huong anticipated that the price would decrease when sugar factories commence production from November 20.

Despite the price hike in the domestic market and an authorised import quota of 100,000 tonnes, domestic sugar traders are not planning to import sugar as the import price is now VND2,000 per kilo more than the domestic price. To deal with the volatility, the Ministry of Finance plans to offer investment incentives to sugar producers.

Minister of Agriculture and Rural Development Cao Duc Phat also said that his ministry had instructed provincial authorities to support sugar producers to encourage them to boost production.

However, Phat said that a master plan was necessary to avoid future market volatility because farmers were reluctant to grow sugar canes due to the volatile price of the crop.

The association anticipated that the 2010-11 sugar crop would yield around 900,000 tonnes, comparable to the 2009-10 crop, meaning the country would also need to import 300,000 tonnes in 2011.