Bangladesh Sugar And Food Industries Corp's tender to export 25,000 tonnes of sugar to the European Union received a single bid of $295 a tonne from London-based ED&F Man Sugar, a state agency official said on Wednesday. The state sugar agency issued the tender earlier in October, its first since 2012, as it struggles with huge stocks amid rising raw sugar imports by private refiners.
"The bid is even lower than our local selling price," the official said after the tender opened, adding a final decision on whether or not to accept the bid would be taken on Thursday. The state agency typically imports white sugar to build its reserves, but good output and high stocks allowed it to come up with a global tender in 2012 to export refined sugar from locally produced cane to the EU, under a preferential quota.
White sugar from the government stockpile is being sold at mill gates at 40 taka ($0.51) a kg, almost half of the production cost. Still, the government agency finds it difficult to sell the sweetener, as private refiners are offering the same price but with more incentives, such as free delivery.
Private refiners in Bangladesh imported around 2 million tonnes of raw sugar in the last fiscal year that ended in June, up from 1.37 million tonnes in the year to June 2013. In April, Bangladesh raised the import duty on raw and refined sugar to discourage overseas buying amid a drop in local prices due to ample supplies. The duty on raw sugar imports is 2,000 taka ($26) a tonne, up from 1,500 taka earlier, while that on refined sugar is 4,500 taka, from 3,000 taka earlier.
The country needs to maintain enough reserves to be able to rein in domestic prices, which have been stable over the past year due to huge raw sugar imports by local refiners. Global sugar prices have been kept under pressure by ample supplies. As a result of four straight years of surpluses, benchmark New York prices on September 17 dropped to their lowest in more than four years.
Bangladesh depends on imported raw sugar to meet annual demand of 1.4-1.5 million tonnes of refined sugar. In late 2012, the government allowed exports of sugar by private refiners who had been calling for overseas sales as they have more than 3 million tonnes of refining capacity.