MUMBAI (Commoditiescontrol) - Pakistan expected to have bumper sugar production of about 8 million tonnes during current sugar season 2017-18 (October-September), as per the Pakistan Sugar Mills Association (PSMA). While country also had produced 7.1 million tonnes of sugar in 2016-17, against the domestic consumption of 5.1 million tonnes.
However, country is expected to have a large amount of commodity stock for on going season. Although, to avoid the excess sugar supply in domestic market, the Economic Coordination Committee (ECC) of the cabinet of Pakistan government had allowed export of 1,500,000 tonnes of sugar on November 28, PKR 10.70 per kilogram subsidy, according to local press reports.
Earlier, on September 21, the Economic Coordination Committee (ECC) of the cabinet had allowed export of 500,000 tonnes of sugar with a cash freight support of PKR 10.70 per kg. Out of that 200,000 tonnes if sugar has already exported by the millers. Earlier in July month also government had allowed export of 300,000 tonnes to minimize surplus.
Meanwhile, the Pakistan millers will get the 25% to 27% rebate of the FOB value of sugar exports. India will be the nearest sugar market for Pakistan.
Currently, ex. mill sugar prices are hovering near the INR 34 per Kg (without GST) in India, while imported sugar from Pakistan will be available at INR 28 to 32 per Kg in India with 50% import duty and 5% IGST. However, there are the possibilities of sugar imports from Pakistan if domestic sugar prices of India rise from current level.
While, sugar imports from Pakistan will be even cheaper in Punjab (India), through the Attari-Wagah land trade route near Amritsar.
On other hand, sweetener imports from Pakistan's Sindh province will be cheapest as Sindh's state government has providing additional subsidy of PKR 9.30 per Kg for the export of surplus sugar. The mills from Sindh are holding nearly 500,000 tonnes of sugar stock as of last month, as per the local daily.
Meanwhile, the combined subsidy is almost PKR 20 per Kg for sugar exports. Which made the price for sugar exports from Sindh province much cheaper from rest of the country. Although, Pakistan's Punjab based sugar mills also demanding for the extra subsidy to the government.
Nevertheless, with a rebate of PKR 20 per kg, the cash freight support will be around 50% of the FOB value of sugar exports. Although, the rates of sugar will be be much lower against the domestic sugar prices.
However, it raising the possibility of higher imports in India.
On other hand, India's sugar mills have produced nearly 4 million tonnes of sugar as of November month in current sugar season. While country also having the carry over stock of 390,000 tonnes from last season. Although, there is ample availability of sugar in India. While sugar prices decline further from current levels, if imported sugar arrives in local markets.
(By Commoditiescontrol Bureau: +91-22-40015532)
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