ISLAMABAD: Pakistani mills will start crushing cane from the new crop this week, the country's top sugar body said on Monday, reducing the chances of imports as a bumper harvest looms.
Pakistan Sugar Mills Association (PSMA) expects nearly 5 million tonnes of sugar from the new crop , with the country still holding about 700,000 tonnes in stocks, including about 150,000 tonnes from 2010 imports.
"We are expecting a 60-million-tonne sugarcane crop, of which mills will likely crush 54 million tonnes and are expected to produce 5 million tonnes of refined sugar," Javed Kayani, chairman of the PSMA, told Reuters.
Annual consumption is about 4.2 million tonnes.
"There is no chance of imports as we will have a surplus in the next season and there is still stock available from the previous season," he said.
Crushing will start in the main sugar-growing province of Punjab by the weekend and in Sindh a week later where farmers still had problems with floodwaters after a heavy monsoon rainfall in August and September.
Pakistan produced 4.1 million tonnes of refined sugar in 2010/11 (July-June) year despite devastating floods in 2010.
Pakistan's government last month decided to import 100,000 tonnes of refined sugar to beef up reserves, without setting a timetable.
But a tender by the state-run Trading Corporation of Pakistan (TCP) early this month to purchase 200,000 tonnes of sugar from local mills, and promises of more supplies by PSMA may reverse the decision to import.
Kayani said mills intend to sell another 200,000 tonnes of surplus refined sugar to the government over January to February, and another 300,000 tonnes around mid-April, at the end of crushing season.
He expects the government to approve the tender which, he said, would help millers make payments to farmers and ensure smooth crushing.
A TCP official said a total of 32 bids for the sale of 215,000 tonnes of sugar had been received against the tender opened on Saturday in a price range of 65,000 rupees ($750.058) and 66,000 rupees, and a decision on bids was likely this week.
Sugar, both raws and whites, dropped to one-month troughs on Friday. ICE March raw sugar futures dropped 0.39 cents, or 1.5 percent, to settle at 25.00 cents a lb, after hitting 24.80 cents, the lowest since Oct. 7.
December white sugar futures on Liffe finished down $22.70, or 3.4 percent, at $652.10 per tonne, after hitting a one-month low at $651.
Kayani, however, said Pakistani sugar would still be cheaper than the landing cost of imported sugar.
An official at the Ministry of Industries, that oversees sugar supply and demand, said a decision on whether to import sugar was not likely before April.
Pakistan had to import about 1.2 million tonnes of sugar last year after production fell to 3.1 million tonnes from the 2009/10 crop, when many farmers switched to more profitable crops.
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