Supplies mar futures trade in sugar as prices recede

By Hamid Waleed –
LAHORE: The sugar trader and investors are in a fix over their future contracts and market derivatives as rising supply of the commodity and consequently receding price have exposed them to losses.
The situation emerged after excessive deals on future counters were witnessed lately whereas government’s permission for unlimited duty free import of sugar and both the factors led to a glut of sugar thereby arresting rising sugar prices in the open market, although still higher than a desirable level.


“Majority of the investors are booking losses due to sluggish prices of sugar in the open market,” they said and added that the wholesale prices are range-bound between Rs 24.20 to Rs 24.35 per kg at present.
The sugar prices in the open market had touched the level of Rs 28 per kg in retail by the end of 2004 when the Economic Coordination Committee decided to allow duty free import of 200,000 tones of raw sugar.
Banking on the higher prices of sugar, sources said, a group of investors had bought 1500 truckloads of sugar from Hamza Sugar Mills at the rate of Rs 25.25 per kg for March future and its payment was due by 31st March 2005.
“The investors are trying utmost to lift the sugar from the mill and are offering sugar for Rs 24.19 per kg while booking a loss of over one rupee,” they said.
As per the market rules, the earnest money of the investors would be seized in case of default and the mill would be free to enter into a new deal with any new buyer.
According to the market sources, majority of the sugar mills have sold their stocks on future counters on different rates.
The fortnightly mill-wise statement up to March 15, 2005 shows that majority of the 39 sugar mills in Punjab have shown a lifting of over 40 percent in general. However, a few mills have shown excessive lifting for the same period.
For example, the Pharianwali Sugar Mills has topped the mills showing a lifting of 99.99 percent out of its total production of 38,730 tones sugar, followed by the Jamal Din Wali Sugar Mills showing a lifting of 81.31 percent out of its total production of 123,302 tons sugar and the United Sugar Mills showing a lifting of 78.66 percent out of its total production of 57,170 tones sugar.
In Sindh, most of the mills, out of a total of 32 sugar mills, have shown lifting of over 50 percent and in the NWFP, the average lifting of a total of six mills falls around 20 percent up to March 15, 2005.
The Trading Corporation of Pakistan has also released 25,000 tones sugar for utility stores, which is available at Rs 23 per kg for the general public. The TCP has yet another 375,000 tones with it procured by it from sugar mills in order to bring them out of the crisis of surplus sugar.
Meanwhile, the total production of sugar mills has come around 3 million tones, about a million short of last year production. The commercial importers have also booked orders for import of 250,000 tones raw sugar. The industry sources are also expecting an import of 400,000 tones refined sugar that would bring the total availability of sugar around 4 million tones.
Therefore, there would be no panicky situation in the market and the prices would continue to vary in between Rs24.50 to Rs 25.50 per kg, said the market experts.
Source: Daily Times, Pakistan

No comments yet.

Leave a Reply