August 29, 2023
DHAKA – Sugar prices have risen globally over the last couple of months and it may go up if India bans export of the sweetener in the coming months.
Any such ban has implications for Bangladesh as the country meets over 98 percent of its annual requirement of 20 lakh tonnes through imports, said officials at local refineries.
The concern has arisen for a Reuters report last week stating, quoting three government sources, that India might ban sugar export in the next season for crushing sugarcane beginning in October.
This probable halt to shipments, the first in seven years, has been attributed to a lack of rain reducing sugarcane yields.
“India has a significant role in global sugar market. So, it will have an impact on a global scale and disrupt the global supply chain,” said Mohiuddin Monem, additional managing director of Abdul Monem Ltd, which runs a sugar refinery.
Sugar prices surged 20 percent year-on-year to $0.53 per kilogramme (kg) in the April-June quarter of 2023, according to the World Bank’s Commodity Price Data.
It has turned dearer, at least in the last six months, as supplies became tight, according to reports by international media.
This resulted from crop losses in growing regions, including India, the second biggest exporter, a slow start to harvests in Brazil, the world’s largest sugar exporter, and increased demand, stated the reports.
Locally, sugar has been traded at a record Tk 140 per kg for several months. Prices declined marginally over the last two weeks after refiners cut their rates.
The wholesale market registered a drop as well. However, prices have inched up over the last two days, said Abul Hashem, former vice president of Bangladesh Sugar Merchant Association.
Sugar was selling up to Tk 1.5 higher at Tk 125 or so per kg at wholesale, he said yesterday, adding that mills delivered sugar at Tk 126 per kg.
Hashem said any ban on sugar export by India would not have that much of an impact on the supply of the sweetener here.
But, he said, there is an upward trend in the booking rate in the global market.
If the upward trend continues and the cost of the US dollar remains on the untick, prices of sugar may spike in the local market, unless the government takes steps, he said.
Monem said any export restriction by India might not restrict supply of sugar for local refiners as they buy raw sugar from Brazil.
“Historically, Bangladesh imports 80-90 percent of the raw sugar from Brazil,” said Monem, managing director of Abdul Monem Sugar Refinery Ltd, one of the country’s five private refineries having a total processing capacity of nearly 50 lakh tonnes.
“Our reliance is on Brazil and if production increases in the Latin American country, there will be little or no impact on the international market, even if India restrict exports,” he said.
Earlier this month, Reuters reported that estimates for Brazil’s centre-south crop was raised to 3.87 crore tonnes from 3.38 crore tonnes in the previous season as mills were earmarking as much sugarcane as possible for sugar production and the weather has been favourable.
Yet, global sugar production will be smaller than the expected consumption for a second straight season in 2023-24 as near-record Brazilian output will not be enough to offset reductions in other regions, the news agency reported citing analysts.
The Meghna Group of Industries (MGI) imported raw sugar from India in the April-October period last year, said Taslim Shahriar, senior assistant general manager at the MGI.
Later it could not make purchases from India as the neighbouring country imposed an export quota of 61 lakh tonnes, he said.
“We have been importing all our raw sugar from Brazil since then,” he said, adding that the crop situation in Brazil was good.
“However, if all buyers become dependent on one supplier, it may affect prices. We will get sugar but we may need to pay higher prices,” he said.
The revenue authority can reduce import tariff on sugar if it wants to give relief to consumers, suggested Taslim.
Altogether, total tax incidence on sugar reaches Tk 40 to Tk 42 per kg, he said.
However, Hashem said prices of sugar would fall gradually if the government cuts duty.
Bangladesh Trade and Tariff Commission Deputy Chief (trade policy) Md Mahmodul Hasan said they were observing the market and recommending measures based on the situation.