In less than two years, Jiagu International has mastered nearly 9% of international raw sugar trading offers through the acquisition of Australia's largest sugar company and Brazil's second largest sugar company.

At the time, Jiagu International's acquisition was ridiculed by many competitors, making it seem that China's new grain merchant was inexperienced – especially the acquisition of Santrisa, Brazil's second-largest sugar company, which was saddled with a debt deficit of nearly $500 million, which was a big hole in the cycle of low sugar prices.

However, no one can still laugh at Gargok International right now.

Since 2010, global commodity markets have risen sharply due to the impact of the second quantitative easing policy in the United States and economic improvement, with sugar leading the way in other commodities.

Especially after entering May, on the one hand, the growth rate of sugar consumer goods has accelerated in the summer consumption season, and on the other hand, affected by the continuous dry weather, the global sugar market has sent out a lot of bullish signals, opening a round of magnificent surge.

At Jiagu International Branch in Sydney, Qi Zheng met with Chen Jianping, one of Jiagu Sugar's trading analysts in this round of sugar bull market and a candidate for the head of the sugar futures risk department.

After joining the big platform of Jiagu Sugar and experiencing the experience of the world's top investment fund, the Assassin Hedge Fund, Chen Jianping is not completely reborn, but it can also be said that his vision and ability have reached a higher level.

For the first time, Chen Jianping came into contact with what kind of skills and skills are needed to develop an annual sugar trading plan for sugar – to have a good understanding of global sugar groups, such as how are the recent cash flows of several large sugar groups in Brazil, how are they doing, and whether Brazil's sugar production will decrease in the next few years? Or in Thailand, the main competitor in Asia, what is the situation of the top four factories in Thailand?

Chen Jianping is even more aware of the impact of a sugar company with 9% of the international raw sugar trading offer on the international sugar market, and how will it affect the international sugar market?

"In fact, the gap between supply and demand caused by meteorological disasters is only the fuse that drives the continuous rise in sugar prices, and the large amount of over-issuance of currency by governments in the financial crisis is the root cause of the overall rise in agricultural prices. Chen Jianping confidently showed Qi Zheng his progress.

Seeing that Qi Zheng was noncommittal, Chen Jianping's words changed: "But for industry leaders like us, the root cause is not important, what matters is the hype opportunity provided by meteorological disasters......"

Qi Zheng bowed slightly.

For upstream producers and traders like Jiagu Sugar, the tight balance between supply and demand in the market is always the state they pursue, but under normal circumstances, oversupply is the state of the market most of the time.

As far as Qi Zheng knows, the reduction in production caused by meteorological disasters will not have a significant impact on the global balance of sugar supply and demand, at least for the time being.

But is this the truth that the sugar giants need?

Apparently not.

This year, many parts of the world have been affected by disasters, which will affect agricultural production, so how can we not take advantage of the trend?

Unlike agricultural products such as cotton and soybeans, which are highly dependent on imports, China's sugar imports are modest, reaching only 10% of total domestic sugar consumption in the last two years – at least in the short term, the adjustment effect of international sugar prices on domestic sugar price changes will not be significant.

Therefore, Jiagu Sugar is also at ease.

"We have lowered our sugar production forecast for Australia and pushed some influential international institutions to forecast that the global sugar market will face a large supply-demand gap...... "Jiagu International's Zhong Huazhi chuckled.

Australia's raw sugar production is about 4 million tons, although the amount is not large, but the vast majority of its raw sugar is exported, so it has an important impact on the international balance of supply and demand.

-- As an international sugar company that controls half of Australia's sugar production capacity, Jiagu Sugar's sugar inventory and output affect the changes in international sugar prices.

Other sugar giants have similarly tacitly pushed for exaggerated bullish signals, with the US Department of Agriculture reporting a downward trend in sugarcane and sugar beet production and sugar production, Brazil reporting a decline in both production and exports, and the Indian government's restrictions on sugar exports due to adverse weather factors, again weighing on global sugar supply expectations......

Well, the only thing that can be determined above is that the Indian side is indeed badly affected, and sugar production will inevitably decline.

Raw sugar futures hit an eight-month high this week as the market increasingly believes that the global sugar market will turn into a shortage, and even the International Sugar Organization has sharply lowered the ongoing global sugar supply surplus for the 2010~2011 sugar year to 196,000 tons from the previous expectation of 1.286 million tons.

With the rise in sugar prices, international sugar companies such as Jiagu Sugar have undoubtedly become the biggest winners.

Chen Jianping reported on the financial department's earnings in raw sugar futures: "The assassin hedge fund took advantage of the recent surge in raw sugar prices to lock in profits, and obtained a total of nearly $300 million in ......"

Zhong Huazhi continued: "Jiagu Sugar's first-half report shows that net income increased by 66% year-on-year, and the full-year profit is expected to exceed US$500 million......

Qi Zheng blinked, so the debt deficit carried by the acquisition of Brazilian sugar companies was easily solved?

But this is the reason why industry giants such as Jiagu Sugar have helped the global sugar market enter a bull market cycle - their inventory and production capacity have guaranteed to share the most benefits in this wave of "sweet returns".

Of course, the sugar rise cycle from futures to spot caused by such capital and public opinion speculation will inevitably rebound, and it depends on who can stay sober all the time, and can not only reap the benefits, but also get out of the way.

There is no doubt that it is still an industry giant like Jiagu Sugar that has more confidence - not only the advantage of capital, but also the advantage of talent.

Chen Jianping soberly analyzed: "Stimulated by the profits of sugar exports, major sugar-producing countries will definitely produce sugar in large quantities, and from the perspective of the overall market supply situation, oversupply will still be the norm." ”

"So, I would advise Jiagu Sugar to stop being obsessed with expanding production capacity, but to maximize sugarcane crushing to minimize costs, or to invest more in sugarcane ethanol......"

When the tide rises, there will be an ebb and flow. Chen Jianping seems to have seen how high the current international sugar price rises, and how bad it will fall in the future. At that time, it is not impossible for sugar prices to fall to production costs, even for sugar mills with the best capacity utilization.

Qi Zheng deliberately said, "So, when do you think this turning point will appear?"

Chen Jianping pondered for a moment and replied cautiously: "It depends on the weather conditions next year. But I don't think it will take more than two years at the longest, and the turning point will come. ”

Qi Zheng and Zhong Huazhi looked at each other and smiled: "It seems that you can pick up the burden of the sugar futures risk department." ”

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