Sugar Semi-annual 2011

An Expert's View about Agriculture and Animal Husbandry in Pakistan

Posted on: 31 Oct 2011

Due to the favorable effects of monsoon rains on the overall Pakistani sugarcane crop, Post revised its MY 2011/12 (Oct/Sept) sugar production forecast to 4.2 million metric tons (MMT), up 10 percent from the initial forecast of 3.8 MMT.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 10/4/2011 GAIN Report Number: Pakistan Sugar Semi-annual Sugar Semi-annual 2011 Approved By: Richard T. Drennan Prepared By: M. Shafiq Ur Rehman Report Highlights: Due to the favorable effects of monsoon rains on the overall Pakistani sugarcane crop, Post revised its MY 2011/12 (Oct/Sept) sugar production forecast to 4.2 million metric tons (MMT), up 10 percent from the initial forecast of 3.8 MMT. MY 2011/12 sugar consumption is forecast at 4.3 MMT, just slightly higher than last year. The forecast for sugar imports is reduced by 50 percent to 300,000 MT. MY 2011/12 ending stocks are expected to rebound and are forecast at 830,000 MT. Executive Summary: Despite rain/flood damages in southern Pakistan, this year?s unprecedented monsoon torrential rains are likely to support the sugarcane crop, consequently Post?s estimate for MY 2011/12 sugar production is increased (400,000 MT) to 4.2 MMT. Current year forecasts are based on an 82 percent crushing level and 8.8 percent sugar recovery. Pakistan?s MY 2011/12 total sugar production forecast is up 10 percent over our initial forecast mainly due to expected increases in area harvested, but also due to increases in yields in select areas. MY 2011/12 sugar consumption is forecast at 4.3 MMT due to an increase in industrial sugar demand. Sugar imports are lowered and forecast at 300,000 tons. MY 2011/12 ending stocks are forecast at 830,000 MT. Commodities: Sugar, Centrifugal Production: SUGARCANE Pakistan is the world?s fifth largest producer of sugarcane in terms of acreage, and the 15th largest producer of sugar. Sugarcane is grown on over a million hectares and provides raw material for 84 sugar mills established throughout sugarcane producing areas of the country. The sugar industry is the country?s second largest agro-industry after textiles. In MY 2011/12, Pakistan?s sugarcane production is forecast at 58 MMT, up 10 percent (52.8 MMT) over the forecast quoted in the annual report. According to provincial agricultural departments, based on first crop estimates, sugarcane acreage increased in the provinces of Punjab, Sindh and Khyber Pakhtunkhawah (KPK) driven by higher prices farmers received last year coupled with strong demand from the industrial sector. In Sindh province, however, while sugarcane planted area increased from 225,000 hectares to 250,000 hectares, recent heavy rains and flooding damaged a significant portion of the crop. According to estimates from the Sindh Agricultural Department, 34 percent of Sindh?s sugarcane crop has been damaged, but based on information from independent sources, however, Post assess the extent of crop damage at about 20 percent of planted area, or 50,000 hectares. Resulting losses in cane production, however, are expected to be more than compensated for as sufficient availability of moisture and increased planting in other areas will increase overall cane production and yields. Industry experts report average sugarcane yields are expected to increase by 5-8 percent based on favorable moisture conditions due to favorable monsoon rains throughout most sugarcane growing areas of the country. Table 1: Sugarcane Area and Production by Province Area (?000' hectares) Production (?000' MT) Province MY MY MY MY MY 2009/10 2010/11 2011/12 2009/10 2010/11 My 2011/12 Punjab 605 680 740 31,612 35,400 40,810 Sindh 234 230 200 13,000 13,900 12,000 KPK 100 100 99 4,400 4,660 5,150 Baluchistan 1 1 1 38 40 40 Total 940 1,011 1,040 49,050 54,000 58,000 Sources: Provincial Agriculture Departments and FAS/Islamabad Production Policy The Pakistani federal government generally does not procure sugarcane, but it authorizes provincial governments to set respective minimum sugarcane prices in consultation with both the sugar industry and farmer organizations. During the MY 2011/12 crushing season, the provincial governments of Punjab and Khyber Pakhtunkhawah (KPK) announced a sugarcane procurement price of Rs.150 per 40 Kg ($43 per MT), whereas the Sindh government has not announced a procurement price. Consequently, as a result of the heavy rains and subsequent flooding in Sindh, the harvest and crushing season may be delayed; which may negatively impact the timely sowing of wheat in the province. The following table shows the history of procurement prices per province since 2000/01 to date. Table 2: Sugarcane Prices by Province (Rs. per 40 kg) YEAR PUNJAB SINDH KPK BALUCHISTAN 2000-01 35.00 36.00 35.00 36.00 2001-02 42.00 43.00 42.00 43.00 2002-03 40.00 43.00 42.00 43.00 2003-04 40.00 41.00 42.00 43.00 2004-05 40.00 43.00 42.00 43.00 2005-06 45.00 58.00 48.00 - 2006-07 60.00 67.00 48.00 - 2007-08 60.00 67.00 65.00 - 2008-09 80.00 81.00 65.00 - 2009-10 100.00 100.00 100.00 - 2010-11 125.00 127.00 125.00 - 2011-12 150.00 - 150.00 - Source: Federal Bureau of Statistics, Government of Pakistan SUGAR Production: For MY 2011/12, refined total centrifugal sugar production is forecast at 4.2 MMT, 10 percent higher than Post?s initial estimate of 3.8 MMT. Enhanced sugar production is based on an estimated increase in sugarcane harvested area and expected increases in average sugarcane productivity mentioned above. Current year forecasts are based on 82 percent crushing and 8.8 percent sugar recovery. Excessive rains have induced vegetative crop growth, therefore, sugar analyst perceive a marginal decrease in sugar recovery percentage over last year?s rate of 8.9 percent. Consumption: Sugar consumption in MY 2011/12 is forecast at 4.3 MMT, marginally higher than last year?s estimate of 4.25 MMT. Pakistan?s population growth and increased industrial demand is outstripping increased production resulting in continued upward pressure on prices. In 2010, sugar prices remained volatile resulting in a higher average price settling at around Rs 0.70 per kilogram ($805 per MT). Annual average prices rose 50 percent compared with the average price in 2008. While this rapid increase in sugar prices have negatively affected household consumption, overall consumption remains constant with growing demand by the processed food sector. Bulk sugar consumers such as bakeries, candy, ice cream and soft drink manufacturers account for about 60 percent of total sugar demand. Market prices of sugar during 2011 are expected to level off around Rs.70 per Kg ($805 per MT) based on enhanced local sugar production coupled with an easing of international sugar prices. Table 3: Average Monthly Sugar Retail Prices (Rs. per Kg) YEAR/MONTH 2007 2008 2009 2010 2011 JANUARY 31.55 26.06 39.38 66.44 72.57 FEBRUARY 30.83 25.73 42.63 68.55 67.02 MARCH 30.63 25.44 43.83 64.87 68.14 APRIL 30.25 25.18 44.96 62.14 67.44 MAY 29.85 28.45 45.45 61.28 65.77 JUNE 28.38 29.75 45.65 63.27 69.19 JULY 29.20 31.68 46.96 66.68 70.74 AUGUST 30.17 32.70 52.16 72.26 74.65 SEPTEMBER 29.85 33.44 48.97 80.43 - OCTOBER 29.36 37.61 45.75 81.91 - NOVEMBER 28.75 37.72 45.75 87.98 - DECEMBER 26.89 35.59 58.50 73.78 - AVERAGE 29.64 30.80 46.66 70.80 69.44 $0.49 $0.38 $0.57 $0.82 $0.80 USD1=Rs.61 USD1=Rs.80 USD1=Rs.82 USD1=Rs.86 USD1=Rs.87 Trade: In MY 2011/12, sugar imports are forecast at 300,000 MT, 50 percent less than projected imports forecast in the annual report. Deflated imports are the result of enhanced local sugar production. Imports of refined sugar are allowed to enter duty free. Stocks: Ending stocks in MY 2011/12 are forecast at 830,000 MT, up 15 percent from our initial estimate due to expected increased production. Production, Supply and Demand Data Statistics: Sugar, Centrifugal P 2009/2010 2010/2011 2011/2012 akistan Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct 2009 2010 2011 USDA New USDA New USDA New Official Post Official Post Official Post Beginning Stocks 550 550 830 830 680 680 Beet Sugar Production 20 20 20 20 20 20 Cane Sugar Production 3,400 3,400 3,900 3,900 3,800 4,200 Total Sugar Production 3,420 3,420 3,920 3,920 3,820 4,220 Raw Imports 0 0 100 100 200 0 Refined Imp.(Raw Val) 1,030 1,030 150 150 400 300 Total Imports 1,030 1,030 250 250 600 300 Total Supply 5,000 5,000 5,000 5,000 5,100 5,200 Raw Exports 0 0 0 0 0 0 Refined Exp.(Raw Val) 70 70 70 70 70 70 Total Exports 70 70 70 70 70 70 Human Dom. Consumption 4,100 4,100 4,250 4,250 4,300 4,300 Other Disappearance 0 0 0 0 0 0 Total Use 4,100 4,100 4,250 4,250 4,300 4,300 Ending Stocks 830 830 680 680 730 830 Total Distribution 5,000 5,000 5,000 5,000 5,100 5,200 TS=TD 0 0 0 0 0 0
Posted: 31 October 2011

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