Sugar update

Sugar exports for the month of May exceeded 112,000 MT; bringing the total exported volume from January-May to just over 300,000 MT (the latest estimates reported by this newspaper are 348,000 MT up till mid-June). Recall that the sugar mills were allowed to export 200,000 MT from January until March, and then were given another extension of 225,000 MT until the end of May.

Sugar production in the country is currently at historically high and unprecedented levels. Last month, the surplus stock was reported at over 1.8 million MT. To put that number in perspective, consider that Pakistan’s annual consumption is 5.1 million MT only. With the increasing shift from cotton towards sugarcane (Read: “Agriculture (2016-17): The year of sugarcane,” published on May 29, 2017), even higher production is anticipated in the coming year and so the existing surplus must be gotten rid of.

The Pakistan Sugar Mills Association (PSMA) has hence been pressing for yet another extension on sugar exports from the ECC. On June 07, the extension was granted to export until July 31 with no change in quota. The inability to meet the export target has been due to issues at the Afghan border, Afghanistan being our only major market for sugar exports.

Now, yet another extension is currently in the works: earlier this week, an inter-ministerial committee headed by the Commerce Minister recommended to the ECC an incremental export of 600,000 MT of sugar in addition to the 425,000 MMT already allocated (bringing the total to 1.025 million MT). However, this is subject to the condition that the price stability in the domestic market is maintained.

Sugar price has been known to rise in the month of Ramazan, when it is in high demand. However, this time around, the price remained relatively stable. Going forward, sugar prices will be monitored as exports roll on. But it’s not all smooth sailing; for now, the PSMA has rejected the proposal as there was no export subsidy allocated. Let’s see how it all plays out.