SHANGHAI: Guangxi Sugar Industry Association is taking steps to continue its efforts to buy up sugar to stop prices from falling in the domestic market.

The collective purchase will start once the prices of sugar futures contracts on Shanghai Futures Exchange fall below 3,600 yuan per ton, the association says.

The local government is trying to arrest the continuous slump in sugar prices since last year that has been hurting thousands of small sugar cane growers in the province. Collective purchasing is widely seen as an effective way to stabilize prices.

"The purchase plan will help balance the oversupply and reduce the losses of sugar producers," said Ma Xiaofei, an analyst of agricultural produce at China International (Shanghai) Futures Co.

"Price stabilization should benefit both sugar refiners and sugar cane growers in the long run because a continuous drop in sugar prices will impede the sustainable development of the industry."

The enterprises designated by the government to execute the purchase plan have been expanded to include all sugar producers in the Guangxi Zhuang Autonomous Region from the originally proposed eight major enterprises.

The collective purchase will absorb 300,000 tons of refined sugar from the market. All trading will be conducted on the Internet.

Sugar prices on the Shanghai Futures Exchange are expected by commodity analysts to fluctuate between 3,600 yuan and 3,700 yuan per ton in the days to come.

"The collective purchase plan would support the sugar price, we see plenty of room for further drop in prices," said Zhang Yong, an analyst with Nanhua Futures Co.

In spite of the accelerating production of cakes and beverage lines in the country, industry experts still expect an oversupply of 800 to 900 tons of sugar in 2007.

Gunagxi Zhuang Autonomous Region is China's leading sugar producer, accounting for some 60 percent of the nation's total sugar output.