Sugar prices recently reacted following announcements of imports from Pakistan and Philippines. Pakistan announced plans to import 500,000 metric tons of sugar in a bid to control market prices and ensure adequate availability of the essential commodity across the country. Meanwhile, Philippines’ Sugar Regulatory Administration (SRA) has approved the importation of 424,000 metric tons of sugar to maintain a stable supply.
International sugar prices, which had been trading lower for the past three months, surged on Wednesday, driven by the news of these large-scale imports.
Commenting on the development, senior sugar expert, Michael McDougall, said that both Pakistan and the Philippines appear to have reacted to the external price drop to enter into the market to buy 500,000 and 424,000 tons of refined sugar, respectively, but they are reacting more to internal price rises.
“Either they are trying to control the price rise in the case of Pakistan, or trying to anticipate it, like the Philippines. Pakistan is having to compensate, given that they allowed exports earlier, and this has now tightened up internal availability. Philippines is dealing more with a long-term production decline,” he said.
Mohan Narang, Director, KS Commodities, said that sugar purchase by Pakistan will stop at a maximum of 200 K ton, which will not impact the prices in the medium and long term. There could be a short-term increase in sugar prices.
Whether the imports would have any impact on the domestic market, Narang said that he is not bullish at all. “With good monsoon, I see prices gradually declining. In October, we may see festival demand, but after that the market will settle down between Rs. 32 to 33 per kg (Ex-mill Maharashtra)”, he said.
McDougall added that even though production for 2024-25 came in better than expected, it is still short of consumption by about 10%. The sudden interest in importing happens to be coinciding with deteriorating weather conditions in Europe, which could impact production prospects if the weather continues dry.
“This has been reflected in the rise of the Oct/Oct (October London vs October New York) white sugar premium, which over the last month has rallied 23% and has now exceeded $110 per ton. This could spur demand for raw sugar as stand-alone refineries are now beginning to see margins improve enough to increase processing,” he concluded.
In a move to boost domestic sugar supply, the Trading Corporation of Pakistan (TCP) has issued its first international tender for the import of 300,000 metric tons of sugar. The tender invites sealed bids from reputable global suppliers and manufacturers, with July 18 set as the submission deadline.
To support the initiative, the federal government has removed all import-related taxes on sugar, aiming to make the commodity more affordable for consumers. The import process will be managed by the TCP and will follow strict quality assurance protocols.
