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Listening to the hourly news over the past week may have convinced most viewers that shutdown across the country has already created a shortfall of sugar in domestic market. It’s also quite believable, considering the country has witnessed a shortage of the sweetener each time it has gone through a general inflationary cycle; and then some.

Why is sugar the second – trailing only flour – to disappear from the utility stores and kiryanas would be more of a comment on behavioural tendencies of the society and is best left to social scientists. What demands more urgent attention, however, is that commodity’s bull run, which was supposed to have paused – if not altogether halt - by Mar-20, is once again resurgent.

Recall that production season began in Dec-19 amid much fanfare; at 1.1million tons monthly production was highest since 2016. Going by LSM figures, total output during Dec-Jan (marketing year 2019-20) is already 24 percent higher compared to the previous year; which begs the question whether the 14 percent dramatic increase in monthly prices since Dec-19 is rooted in fundamentals, or indicate another round of price gouging? More importantly, where will prices be headed next?

While some sceptical readers may point out that a slowdown in sugar production is no exception considering a lockdown of most manufacturing large-scale concerns, consider that sugar production cycle is usually a 100-115 days affair. Consider also that sugar production had already begun in the heartland of south Punjab and Sindh by early December, indicating that by the time shutdown began to ripple through in last week of March, most mills should already have been ramping down crushing cycle.

But full production days need not dictate that supply is sufficient. To that end, officials of Pakistan Sugar Mills Association note that the country had begun crushing season with carryover stocks of 0.7million tons. Even if output for Feb-Mar 2020 comes out at 2.2 million tons – less than the lowest two-month output for past ten crushing seasons - production for MY20 will stand at least 4.8million tons.

Inclusive of the opening stock, that should be comfortable sailing through for domestic needs till Nov-20 given a ban on exports, and more importantly, expected slowdown in demand from commercial segment given the brakes pushed on consumer spending.

Yet, if weekly SPI for last two weeks of Mar-20 is any guide, retail sugar prices have continued their upward trajectory since recording of CPI prices during the second week. In fact, retail price has increased 2.6 percent (or Rs 2.1 per kg) between 14-Mar and 26-Mar, contradicting not only the seasonality effect anticipated during peak crushing, but also the movement in tandem with CPI which has declined by 216bps in Mar-20.

If the more suspicious among readers are still unconvinced, consider also that sugar is among first few items exempted from goods transportation restrictions list announced by provincial governments in Punjab and Sindh. Consider also that it may not be far-fetched to claim that dhaabas and roadside tea stalls are the first to witness closure of operations, when the hammer of district administration comes down hard.

Considering that Ramzan (followed by peak summers) is due to begin in less than a month, be not surprised if the spiral in sugar price continues upward in April and May. But if the lockdown persists beyond mid-April, also be certain that it’s a case of price-gouging, not shortfall of supply.