Sugar Satta Begins in Middle of Crushing Season Despite Smuggling Curbs

After a brief respite, sugar prices are once again on the rise, influenced by various factors despite being in the midst of the sugarcane-crushing season. Average Ex-mill sugar prices have surged from Rs. 12,000-12,200 per 100 kg to Rs. 13,300 in just a few days. The wholesale market has also witnessed a Rs. 12 increase per kg, and retail prices are touching Rs. 140 per kg in different cities. The Pakistan Sugar Mills Association (PSMA) had previously warned of operational losses due to a liquidity crunch arising from high finance and production costs, including higher carry-over stocks. Millers had sought to either export or sell stocks to the government through the Trading Corporation of Pakistan, but the government has not responded positively to these demands. Despite efforts to curb smuggling at the borders to stabilize inflation amid a lower sugarcane production forecast, market forces appear to be dominating. It has been an eventful year for the sugar market, whether good or bad, depending on where you are in the value chain. An average consumer or farmer, a hoarder playing satta on the market, or a sugar mill owner. Consumers were squeezed right and left when prices crossed Rs 200 per kg, mill owners and big brokers mostly went unscathed, got out in time and allegedly made billions through both right and wrong. At the same time, some traders lost billions when an administrative crackdown turned the tables in September. Sugar prices stayed low continuously as people who lost money were reluctant, but the market got its hype back in the last few weeks with a price hike in both retail and wholesale prices. “The regular demand and sales are unable to lift the market in the middle of the crushing season, so the big eight to ten traders are doing their best to achieve it through selling to stockists, but the market has internal differences from last fall out,” stated a market consultant while talking to ProPakistani He added that forward buying and satta is not advised, but it’s a lucrative business and some are still stuck in it as traders are realizing the lower production outlook of sugarcane this season and some millers have started to pay long haul prices for trolleys coming from far away regions to achieve volumes. Cost of production may have gone up also but millers may also struggle to secure enough volumes amid lower production of sugarcane. As for the sugar, it looks that despite the government’s attempts to not let the sugar genie out of the bottle, the underlying satta market is still well and strong and is still driving the market.