Some sugar producers are temporarily halting production due to a glut in supply and a sharp decline in market prices, the Vietnam Sugar and Sugar Cane Association said on March 28.

Domestic sugar prices have decreased sharply since earlier this month, as wholesalers have hesitated to buy sugar with substantial supplies already on hand, the association said.

The association's general secretary, Ha Huu Phai, noted that the plunge in sugar prices was also tracking global prices. In the first two weeks of this month, global prices fell from an average of 850 USD per tonne to just 700 USD per tonne, due in part to a recent bumper cane crop in Thailand .

Substantial amounts of processed sugar is illegally imported into Vietnam, with wholesale prices ranging from 17,000 VND-17,500 VND (about 0.85 USD) per kg.

Domestic retail prices have therefore declined from about 24,000 VND-25,000 VND (around 1.20 USD) ahead of the Tet (lunar new year holiday) to just 20,000 VND-22,500 VND (0.95-1.10 USD) currently, Phai noted.

He expected a seasonal slump in sugar prices to last until summer.

"Summer is when people consume more sugar, so I don't see an increase in prices until then," Phai said.

The association will send a request to the Government seeking easier credit terms and co-ordinating with relevant agencies to stabilise prices.

"As the market fluctuates, it has become difficult to define exactly what will be a reasonable price, but sugar prices will not be reduced further," said Phai.

"The Ministry of Industry and Trade has accepted a quota of 250,000 tonnes of imported sugar, plus the estimated 1.1 million tonnes that will be produced domestically this year, to balance supply to actual demand," he said.

Meanwhile, however, some sugar mills have encountered difficulties obtaining financing at reasonable terms to buy cane for the new production cycle, encountering tighter credit and higher interest rates of around 18 . They generally buy about 169,000 USD worth of cane per day, with bank financing meeting only about one-third of that amount.

Two mills in Ca Mau and Kien Giang provinces have already closed their doors due to lack of funds, leaving buyers for only about 70 per cent of the unprocessed sugar cane produced in the Mekong Delta region./.