Sugar prices, which are now hovering at Rs96 per kilogram, are expected to decrease by 10 to 15% in the next two to three weeks, according to market observers.
The tea leaf readers say that sugar companies presently retain 1.58 million tonnes in their stockpiles, explaining the backdrop of expectations. As hoarding loses its commercial appeal, its monthly releases fell to 270,000 tonnes in June (from 350,000 tonnes in May).
According to agricultural data, cane currently spans 2.148 million acres in Punjab, a 12 percent increase over the previous year. Millers produced 3.75 million tonnes of sugar last season and are anticipated to produce 4.5 million tonnes this year, or around 800,000 tonnes higher than average yearly releases, which also feed Khyber Pakhtunkhwa, Gilgit-Baltistan, and Azad Jammu and Kashmir. Because the federal and KP governments are now importing sugar, exporting it is out of the question, which may lead to a drop in local prices.
According to the local dealer, the revised Sugar Factories Control Act, which was announced late last month, laid the ground for a price decrease. It transferred the management of the sugar-crushing season from millers to the government, which now favors farmers. The Act gives the government the authority to choose when the crushing season begins.
The millers are squeezing supply and driving up prices. Otherwise, the existing stock position, its possibilities of sale, the next season, and anticipated output next season all lead to one direction price decline. But how long can the millers maintain stockpiles on hand and keep the price high? Mr. Akram believes that the problem will be resolved within the next week or two.
“The price will only drop in October”, predicts one of the main resellers in the city, who declined to be identified because of the sensitivity of the business. And that would only happen because of market manipulation, not reality. The millers would keep the price high, mint money for the next two months, and then start ‘behaving’ (increasing supply) in October so they could seek some favors in the sugarcane price and, more importantly, decide when the season would be. grinding Must start. That surplus sugar would stay in the supply chain and continue to test the millers’ finances and resolve, the merchant said.