Sugar output in China's top growing region is set to be the lowest in six years, said Australia-based Green Pool Commodities on Thursday, as it revised down its estimate for production in one of the world's top producers.
Green Pool expects output in southwestern Guangxi region to drop to 5.4 million tonnes in the 2022/2023 season, it said in a report, down 12% on last year, and the lowest since 5.3 million tonnes in 2016/17.
Nationwide production will fall to 9.17 million tonnes, it said, reducing its forecast from last month's estimate of 9.52 million tonnes.
"Guangxi's rapid winding down points to dwindling cane supply," said the Green Pool report, referring to a shorter than usual harvest.
"Local farmers suggested that some cane harvested later in the season has featured considerable drought damage," it added.
China's agriculture ministry also reduced its forecast for the country's production by 7.2% to 9.3 million tonnes this week.
The cut comes as expectations of lower production in other major producers Thailand and India push global prices to multi-year highs.
The most-traded contract on China's Zhengzhou Commodity Exchange has rallied almost 5% this month to 6,205 yuan ($891.29) per tonne, its highest level in six years, amid market concerns over the domestic crop.
China is the world's second largest sugar consumer after India and relies on imports to meet demand of about 15 million tonnes a year.
But high global prices are currently denting demand for imports, said a Shanghai-based sugar trader who declined to be identified.
China's Guangxi suffered from drought for most of the second half of 2022, with about 76% of cane impacted by November last year, state-owned media China News reported at the time.
Guangxi has been hit by drought again since last month, according to a report by the China Meteorological Administration on Feb. 28.
($1 = 6.9618 Chinese yuan renminbi) (Reporting by Qin Ningwei and Dominique Patton Editing by Mark Potter)