Key Takeaways from the ZTF (Zijin Tianfeng Futures) Research Institute
Based on current expectations, Guangxi is projected to increase production to 8 million tons, Yunnan to 3.2 million tons, Inner Mongolia to 500,000 tons, and Xinjiang to 800,000 tons. A preliminary estimate for domestic sugar production in the 26/27 crop year is 12.5 to 13 million tons. On the demand side, although there is a widespread perception of declining consumption, this is partly due to a lack of stockpiling by intermediate links and downstream end-users. For now, demand can still be considered stable. Under this supply-demand balance sheet, the import volume within the tariff-rate quota (TRQ) should be sufficient to maintain normal domestic demand. Therefore, government controls on out-of-quota import licenses, as well as restrictions on imported sugar syrup and pre-mixed powders, are particularly critical. Internationally, Brazil's sugar production progress and India's high domestic sugar prices could become key drivers for future market trends.
1. Research Background
China's sugar consumption is approximately 15 million tons, with supply sourced from cane sugar, beet sugar, and imported sugar. In the 25/26 crushing season, domestic sugar output exceeded 12.95 million tons, a year-on-year increase of 1.8 million tons, raising the self-sufficiency rate to 85%. For the 26/27 season, major cane sugar-producing regions like Guangxi and Yunnan are expected to continue their production growth cycle. Influenced by lower sugar prices and restrictions on import license quotas, northern beet sugar and raw sugar processing enterprises will face more severe production challenges. Their operational development will directly impact the national sugar market's supply-demand dynamics and price changes. To address these industry focal points, our team participated in the "2026 Northern Processed Sugar + Beet Sugar Industry In-Depth Research" trip, visiting key northern beet sugar regions and core processed sugar areas. By conducting on-site visits to sugar production enterprises, processing plants, and traders, we gathered first-hand industry information to deepen our understanding of market rhythms.
2. Research Content
The research covered production expectations for northern beet sugar in the 26/27 season, operational conditions of regional processed sugar factories, end-user procurement and consumption patterns, alternative market dynamics, and trade flows and regional price spreads.
3. Research Itinerary
The research trip took place from August 10 to August 14, 2026, following the route: Dalian – Yingkou – Chifeng – Zhangbei – Zhangjiakou.
4. Company Details
Downstream End-User A
Location: Dalian. This company uses approximately 5,000 tons of sugar annually, primarily Grade 1 carbonated sugar and processed sugar. It finds that the substitution effect of high-fructose corn syrup (HFCS) is very limited, as it affects product taste. Guangxi sugar has more impurities, and beet sugar tends to be yellower, so the company insists on using processed sugar and is not inclined to switch procurement varieties easily. The cost of sugar procurement accounts for less than 10% of total production costs, making the company less sensitive to price fluctuations. Current procurement prices are between 5,700 and 5,800 yuan per ton. If prices rise to 6,100–6,300 yuan per ton, it would be considered expensive, but the company would not reduce its purchase volume. In June, due to relatively low sugar prices, the company pre-purchased a three-month supply, but prices fell further after the purchase, leading to dissatisfaction with the buying price. The peak season is from July to September, with a smaller peak from November to January. Due to limited storage capacity (100-300 tons), inventory turnover is typically around one week, and the company primarily buys as needed. Sales are mainly domestic, with the best performance during the pandemic years. Sales have been stable in recent years. The market space is limited, but industry concentration is expected to gradually increase. The company is considering expanding into Southeast Asian markets. This year, the pace of destocking in the North during summer has been slower than in previous years. Recently, inventory is being cleared gradually. It is estimated that processed sugar factories will resume operations in October, so supply pressure seems manageable for now.
Small to Medium Trader B
Location: Dalian. This local trader has an annual trade volume of nearly 10,000 tons. It deals in Shandong processed sugar, Liaoning sugar, and a small amount of Guangxi sugar, along with other products like salt, MSG, and starch. The number of traders in the market has decreased, and competition is fierce. The trader holds 600 tons of inventory, which turns over quickly, roughly once a month. Trade volume has declined by about 20% this year. Most customers are end-users, but their purchase volumes have decreased. End-users are afraid to build inventory and only buy as needed. The port arrival price for Guangxi sugar is 5,300 yuan per ton (with a freight cost of 200 yuan per ton), while Liaoning sugar is around 5,800 yuan per ton. Beet sugar, which would normally be cleared by this time, still has some remaining inventory. Hot weather may cause some off-flavors, and the selling price is 5,700 yuan per ton (freight 120-150 yuan per ton). The volume of "screened sugar" (a lower-quality product) has decreased this year, presenting less of a market disruption. Reasons for the decline in downstream procurement include: 1) Traders and end-users are not building inventories, shifting from annual to seasonal purchasing; 2) Consumption downgrading is occurring, with some small and medium-sized end-users closing down; 3) Sugar factories are increasing direct sales, reducing the volume flowing through intermediary traders. Overall, this year has been characterized by a lackluster peak season. The trader's outlook is pessimistic, having purchased more sugar earlier this year only to incur losses due to negative basis. Inventory levels among traders and end-users are very low.
Trader C
Location: Yingkou. This trader's annual volume has reached 50,000 tons so far this year, significantly less than the 100,000 tons-plus seen in the same period of previous years. Sales are primarily to end-users, including canning, cold drink, and other industrial factories. Export-oriented products like canned goods require processed sugar, which is priced at 5,730 yuan per ton from COFCO, 400 yuan per ton more expensive than Yunnan and Guangxi sugar. This year, a price spread of over 200 yuan per ton between Guangxi sugar and processed sugar would prompt consideration of switching varieties. The spread has reached over 500 yuan per ton this year, so Guangxi and Yunnan sugar have moved well in the North (Guangxi sugar: 5,120 + 180 = 5,300 yuan/ton; processed sugar: 5,780 yuan/ton). With the decline in trade volume, traders are unwilling to hold stock, and end-users are not building inventory, resulting in all inventory being concentrated in warehouses. The baking industry in Liaoning has seen a significant downturn, as has the beverage sector. However, snack shops are booming, and cold drinks are performing well. Exports of seafood and cold drinks to Russia from the local area have increased notably. For the new season, Guangxi output is expected to be over 8 million tons, Yunnan over 3.2 million tons. Beet growth in Inner Mongolia is good, but planting intentions are low, with a projected output reduction of 200,000 tons, bringing total production to 450,000-500,000 tons. It is quite possible that the price spread between Inner Mongolia sugar and Guangxi sugar could flatten this year. For cross-regional processing, Yunnan sugar has a production cost of 4,900 yuan per ton, plus 300 yuan per ton for freight and 400 yuan per ton for processing into soft white sugar, resulting in an ex-factory price of 5,600 yuan per ton. Soft white sugar is relatively scarce this year, sells well, and has a sales price of 6,050 yuan per ton. For delivery warehouses, Inner Mongolia sugar costs 5,050 yuan per ton, and after adding the Yisheng Logistics Warehouse premium (+100 yuan/ton) and freight (160 yuan/ton, with an 80 yuan/ton subsidy), the total cost is about 5,300 yuan per ton.
Shipping Logistics Company D
Location: Yingkou. This company primarily transports corn, corn starch, MSG, feed, corn oil, and minerals or steel. Sugar is a relatively small category. The outbound transport of northern sugar, previously around 200,000 tons, has shrunk significantly this year, mainly due to substitution. The substitution of corn starch-based sweeteners (like HFCS) for sugar is very prominent, with outbound transport volumes of these products being very large (1,000-2,000 containers per month, 26-27 tons per container) to both coastal and inland areas. The main reason is the large price difference between sugar and HFCS. After preliminary research showing that recipe changes did not affect sales, large-scale HFCS substitution has begun. Fluctuations in oil prices and foreign trade conditions have a significant impact on shipping. High foreign trade rental rates, high container and ship prices, and elevated oil prices have led to increased costs for both domestic and international transport. Freight rates in recent years have roughly matched these costs.
Sugar Production Enterprise E
Location: Yingkou. Established in 2012 with a daily processing capacity of 1,000 tons of raw sugar, this enterprise supplies the North China and East China regions and has qualifications for state reserve sugar storage and processing. It mainly produces soft white sugar and white granulated sugar. Output declined after the pandemic but has recovered somewhat in the past two years. The plant is expected to start up in early September; the start-up and output depend on the issuance of licenses. China's procurement of raw sugar may influence international sugar prices by 20-30%. The shipping period from Brazil is 45 days. Demand from the cold drink and dairy industries has been much weaker than before 2020, though it is slowly recovering. The cocoa product sector has cut production due to rising raw material costs (cocoa, coffee), indirectly reducing sugar demand. Beverage demand has decreased, partly substituted by milk tea, and more beverage manufacturers are using HFCS as a raw material. Demand from pharmaceutical companies is relatively stable. In Northeast China, the focus is on civil-use soft white sugar, which is stable. The customer structure has shifted, with traders making up a larger proportion and end-users decreasing. This is because the main product is soft white sugar, which requires distribution by traders (this is an exception and not representative of the white granulated sugar market). The processing fee is 500 yuan per ton, plus port-to-plant freight of 10-20 yuan per ton. The main product is carbonated sugar, so processing auxiliary costs are relatively stable, and quality is consistent. The company is considering pure toll processing, but high freight costs mean it still lacks a clear competitive advantage internationally.
Sugar Production Enterprise F
Location: Chifeng. This company is primarily a yeast producer that later entered the sugar industry to secure raw material needs and capitalize on the sector's potential. For Inner Mongolia's production, average beet yields are 3-4 tons per mu, with a maximum of 5 tons per mu. Land rental costs are 1,000 yuan per mu for better land in the east and 700-800 yuan per mu for poorer sloping land, with corn as the competing crop. Land quality in the west is poorer, costing 500 yuan per mu, yielding 3 tons per mu. Compared to sugarcane, the advantages are very low. The northward shift of the rain belt is very noticeable, and excessive rain severely affects seedling emergence. The western region suffered severe damage in 2025, with tens of thousands of mu of beets completely lost. The eastern region fared slightly better with sloping land. Farmers need a yield of 3.5 tons per mu to break even, with a total planting cost of 1,800 yuan per mu. The factory produces 33,000 tons of yeast and historically processed up to 600,000 tons of beets annually. This year, normal planting was 67,000 mu, but 7,000-8,000 mu were lost and replanted. With a yield of 4 tons per mu, the processing volume is expected to be 220,000-250,000 tons of beets. Since the 25/26 season, beet volume has decreased by about 10%, mainly due to farmers' reduced willingness to plant after disasters (rain, hail) and high land rents. New farmers are no longer entering the market; only long-time farmers remain, increasing concentration. Sugar content is a major issue for beets. In western Inner Mongolia, sugar content is 14-16% or more. In the Chifeng area, with 4 sugar factories competing intensely, content is only 11-12%. Raw material costs account for 70-75% of total costs (land rent, transport), leading to significant losses. The purchase price is 540 yuan per ton at the farm gate (at 14.5% sugar content) and 680-780 yuan per ton delivered to the factory (at 12% sugar content). Production costs are around 750-780 yuan per ton recently, with 12% sugar content, making costs quite high. The processing fee is 700 yuan per ton, which can reach 1,000 yuan per ton including downstream processing. Molasses sells for 1,200-1,300 yuan per ton, and beet pulp for 1,800 yuan per ton. The final total cost is around 6,100 yuan per ton. For sales, 4-5% of beets yield pulp, and 4-5% yield molasses. The factory produces 10,000-20,000 tons of molasses in-house but needs to purchase over 100,000 tons externally, sourcing cane molasses or hydrolyzed sugar. 20-30% of sugar is sold in small packages, fetching 1,000 yuan per ton more than bulk sales. As sugar prices have fallen, consumption has picked up somewhat, and sales are good. Small package sales are stable. The main reason for current high inventory is the substantial production volume. Future development depends on: 1) No progress at the national policy level yet. 2) Domestic seeds might improve planting conditions. 3) Achieving a 5-ton yield per mu with 16% sugar content would greatly increase the chance of profitability. 4) Survival is only possible through the integration of the entire industrial chain for ecological recycling.
Sugar Production Enterprise G
Location: Xilingol League. The company has three factories with a combined capacity of 200,000 tons of sugar. Last quarter's inventory across Inner Mongolia was 140,000 tons, less than 50,000 tons higher than the same period last year. Sugar is moved to the Beijing-Tianjin-Hebei market. End-user demand is poor, with downstream consumption of sugary drinks down 60%, while dairy demand is stable. Traders are not holding inventory, putting pressure on sugar factories. Inner Mongolia's output is 50% soft white sugar and 50% white granulated sugar. Last year, Inner Mongolia had 1.8 million mu of planted area for beets, which decreased by 500,000 mu this year. The company's own planting area fell by 25% to 170,000 mu. Following two consecutive years of disasters, farmers face severe debt problems and reduced loan availability. The purchase price for beets with 14.5% sugar content is 480 yuan per ton locally (increase of 40 yuan per ton per 1% sugar gain), and 500 yuan per ton in Chifeng (competing with crops like corn). Against the backdrop of lower sugar prices, processing enterprises have reduced their willingness to purchase beets, preferring high-sugar ones to cover production costs for 100 days. If there is no rain in August-September, local sugar content can reach 14.5%, and yields 3-3.5 tons per mu. Maximum yields in Inner Mongolia are 5 tons per mu. Total planting cost is 1,800 yuan per mu, with land rent falling to 600 yuan per mu (down 100 yuan per mu year-on-year). Xinjiang has clear advantages, achieving yields of 7-8 tons per mu and sugar content up to 18%, with stable planting area, although freight costs are higher than Inner Mongolia. Mechanical harvesting costs 80 yuan per mu. Last year, processing costs excluding by-products were 5,500 yuan per ton. Molasses was 600 yuan per ton, and pellets 1,000 yuan per ton. Impurity deduction was 11% (as low as 7-8% historically), with a 1% sugar loss, resulting in a final sugar content of 13.5%. White granulated sugar and soft white sugar can be converted within 24 hours. Soft white sugar is 30-50 yuan per ton cheaper to produce than white granulated sugar but sells for 200-300 yuan per ton more; the issue is slower cash flow. Delivery costs are 140 yuan plus 0.5 yuan per ton per day, with inspection exemption. Sales are exclusively to traders who pay in full, while end-users might have credit terms. Beet sugar, if stored for a long time, may develop flocculants, affecting colorless beverages but not colored ones. Beet sugar is primarily for civil use, while cane sugar is for industrial use. One-third of by-products are supplied to dairy companies like Mengniu and Yili for cattle feed. The price of beet pulp is estimated as bean pulp + 300 yuan/ton, or corn * 80%. This year, beet pulp prices have increased by 100 yuan/ton year-on-year.
Beet Farmer H
Location: Zhangbei. This year has seen high rainfall, combined with reduced farmer planting intentions, leading to a projected maximum output of only 500,000 tons from Inner Mongolia's new season. By-product prices may improve this year due to lower production volumes. Beets were planted before May Day; earlier planting improves yield and sugar content. The yield is 5 tons per mu, and the local sugar content in Zhangbei is generally high, at 17% for this field. Land rent has dropped significantly, from 700 yuan per mu last year to 300-450 yuan per mu this year. Mechanical harvesting costs 180 yuan per mu. The total planting cost is 1,600 yuan per mu. A field can be planted for a maximum of two seasons before being affected by leaf spot disease, which reduces yield and sugar content, keeping it at a maximum of 14%. The processing purchase price is 480 yuan per ton, with an additional 40 yuan per ton for each 1% increase in sugar content. The sugar processing fee is 700 yuan per ton, with the main cost being the beet purchase price.
5. Summary
This report's conclusions are based on data from the surveyed sample enterprises. The situation of these sample enterprises may differ from the overall industry. This report is for reference only and does not constitute investment advice.
1) Production Estimate: Beet planting area in Inner Mongolia is expected to decrease by 20%, with final sugar output possibly falling to 500,000-550,000 tons. Reasons for the reduction include: a) Increased rainfall in the region over the past two years, leading to severe damage to beet crops; b) Consecutive years of losses for beet farmers, significantly reducing their willingness to plant. Xinjiang, with its high yields, high sugar content, and dry climate, maintains stable planting.
2) Planting Costs: Overall planting costs in Inner Mongolia are 1,600-1,800 yuan per mu. Due to decreased farmer enthusiasm, land rent has fallen to 300-400 yuan per mu this year, down from 700-800 yuan per mu last year.
3) Purchase Prices: The purchase price is 480-540 yuan per ton, with an additional 40 yuan per ton for each 1% increase in sugar content. Maximum yields in Inner Mongolia are 5 tons per mu. Sugar content ranges from 12% to 18%, with lower content in eastern Inner Mongolia and the highest content near Zhangbei.
4) Sugar Production Enterprises: Processing fees range from 400-700 yuan per ton. The comprehensive sugar production cost is around 5,500 yuan per ton. It is expected that with lower overall beet sugar output this year, by-product prices may rise.
5) Sales Progress: Current inventory in the Inner Mongolia region is estimated at 140,000 tons, compared to only 50,000 tons at the same time last year. There is a general consensus that downstream end-user demand has shrunk. Demand for soft white sugar is better than for white granulated sugar. Dairy and civil-use demand is stable, while beverage demand has declined noticeably.
6) Inventory: Due to continuously falling sugar prices this year, traders are reluctant to purchase, only accelerating turnover. Some downstream buyers have shifted from annual to seasonal procurement, primarily buying as needed. As a result, previously "hidden" inventory has become "visible" this year, concentrated in sugar factories, leading to a destocking pace significantly slower than usual.
7) Comprehensive Assessment: Based on current expectations, Guangxi is projected to increase production to 8 million tons, with Yunnan at 3.2 million tons, Inner Mongolia at 500,000 tons, and Xinjiang at 800,000 tons. A preliminary estimate for domestic sugar production in the 26/27 crop year is 12.5 to 13 million tons. On the demand side, although there is a widespread perception of declining consumption, this is partly due to a lack of stockpiling by intermediate links and downstream end-users. For now, demand can still be considered stable. Under this supply-demand balance sheet, the import volume within the tariff-rate quota (TRQ) should be sufficient to maintain normal domestic demand. Therefore, government controls on out-of-quota import licenses, as well as restrictions on imported sugar syrup and pre-mixed powders, are particularly critical. Internationally, Brazil's sugar production progress and India's high domestic sugar prices could become key drivers for future market trends.
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