Sugar prices to stay stable during Ramazan

KARACHI: Sugar prices are likely to remain stable on availability of ample stocks in the local market despite an upcoming seasonal demand in the month of Ramazan, starting in the first week of June, traders said on Thursday.

They said prices of the sweetener showed some strength last month but supply glut checked major movement. Dull export markets have also ensured price stability ahead of the Muslim fasting month.

“Market prices usually rage up prior to Ramazan, but this year prices are seen to be stable,” said a trader.

Sugar spot wholesale prices quoted at Jodia Bazaar are largely stable, ranging between Rs59-60/kg since the end of March this year. Ex-mill prices of the sugar quoted at Rs59/kilogram on Thursday.

Traders said the sugar mills increased domestic supplies after the period of 500,000 tones of export quota for the sugar mills ended in March, 2016.

Zahid Bukhari, General Secretary of Karachi Wholesale Grocers Association, said the market seems to be oversupplied unless the government has resumed export quota for the millers to export excessive sugar stocks from the last year.

"The millers are trying to compensate their declining foreign profit margin through domestic sales," said Bukhari.   

The retail prices have been static at Rs63-64 for the last two months.    

Analysts said banned on Pakistani sugar in Afghanistan also helped kept prices stable.

“Afghanistan has been a huge consumer of Pakistani sugar and as compared to last year, before Ramazan, exports were open which had a huge impact on the local market,” said Shakir-ullah, researcher at Pakistan Agriculture Research. 

“Due to the ban on exports, Afghanistan covered its appetite for sugar from other destinations such as Dubai, India and Brazil. But apart from the legal exports from Pakistan, a lot of their demands used to be fulfilled by smuggled sugar, especially before Ramazan, which fuelled the markets,” he said.

“But due to good government policies and control, specifically this year, the government was able to curb and block these leakages, and as a result excess stocks remain firm.”

Another noticed factor was the lack of buying from the government in respect of Ramazan packages.

“In the previous years, the government used to buy sugar in bulk quantities before Ramazan which would raise the market prices, but this year, buying has been scarce and in very small quantities,” Shakir-ullah said. “People in the markets are also of the opinion that prices are staying low due to the pressure of the upcoming budget.”   

Sugar production in 2015-16, coupled with a handsome 1.34 million tons carry forward from last, results to sum up to a total supply of 5.34 million tons of sugar, which is once again over and above the domestic consumption of an estimated 4.6 million tons.

The government has until now only allowed an export quota of 500,000 tons till March 16, out of which not more than 300,000 tons of sugar was exported. Further exports are banned, putting Pakistan’s sugar balance sheet in an over supplied position.