Sugar prices expected to remain range-bound

The holy month of Ramazan is just around the corner. Every long and hot day while fasting and abstaining from food and fluids would give way to feasting in the evening, so trust those taste buds to crave for more of everything. Therefore, the outlook for sweeteners looks bright in Ramazan, as the consumption of confectioneries, bakery items, sweets and soft drinks would grow manifold. And sugar in the country is aplenty, so there should be no issue of availability and accessibility during the holy month. According to the latest Economic Survey, sugar cane production in Pakistan reached 58 million tons last year on account of increased acreage. This resulted in production of some 4.61 million tons of sugar, sufficient to cater for an estimated domestic demand of 4.2 million tons. The buffer stocks seem steady. The Trading Corporation of Pakistan had 0.347 million tons of sugar in its reserves as of July 16, and will, reportedly, be purchasing another 0.2 million tons from local sugar mills by July-end, anticipating higher sugar demand during Ramazan. TCP had already procured 0.478 million tons from domestic mills due to improved production and satisfactory availability of sugar in the country. This brings to the question of prices and affordability. For the underprivileged, efforts are being made by the government to maintain sufficient supplies of sugar during Ramazan at the Utility Stores Corporation outlets, at a discounted price of Rs.48 per kg. To ensure that, the USC management has reportedly requested TCP to supply 75,000 tons of sugar, which is 25,000 tons more than USCs monthly quota. On the other hand, the market prices of sugar are expected to remain stable in the near future. According to market sources, sugars ex-mill price in Sindh is currently Rs.48.5 per kg. With a wholesale rate of Rs.50 per kg, the retail prices start from Rs.54 per kg and go up to Rs.56 per kg. In Punjab, the ex-mill price is currently ranging between Rs.50-Rs.51 per kg, which takes the retail price up to Rs.57 per kg. There are, however, minor retail price variations depending on factors like type of packaging (loose or packed) and location or point of purchase. Till the next crushing season starting in November, sugar prices will be depending on future events like government procurement, international prices and exporting activity. The government might procure when it requires, but a major uptick in exports is rather uncertain. Sugar is currently trading in the international market at around $617 per ton, which does not offer much of a premium over local prices. It must be noted that despite the governments permission to export sugar in February this year (after a two year ban), the export orders have not picked up. As per the Pakistan Bureau of Statistics estimates, the countrys official sugar exports stood at 4,201 tons in March, 19,575 tons in April, and 5,467 tons in May this year. Since future exports hinge on attractive international prices, exports may remain drab. Assuming such status quo (and low incidence of hoarding), it is safe to say that the local sugar prices will remain below Rs.60 per kg, at least during Ramazan.