• Pakistani sugar exports seem to have stopped for the season.
  • This is because the export subsidy offered by Punjab province has stopped and the domestic market now offers a better return.
  • Most of the sugar had been supplied to Afghanistan and China so the world market impact is limited.

Chinese Import Quota is Unfilled 

  • Pakistan has exported 480k tonnes of white sugar since the start of 2019, mainly to Afghanistan and China.
  • These exports were facilitated by an export subsidy of around USD 35/mt offered by the Punjab regional government.
  • However, this subsidy has recently been withdrawn and Pakistani prices have started to rise, so exports are no longer viable.
  • Export parity is now around USD 430/mt.

  • This means that Pakistan’s 300k tonne duty-free sugar quota to China is unlikely to be filled this year.
  • Shipments to China have only reached 183k tonnes so far this year.
  • This quota was awarded as part of a wider trade deal offered in return for Pakistan’s government to build a high speed rail link between the two countries.
  • This rail link would enhance the value of Chinese investments in the port of Gwadar, linking China’s Belt and Road initiative with its Maritime Silk Road initiative.

Domestic Prices Supported 

  • We are a little surprised that Pakistani prices have strengthened as much as they have this year.

  • Domestic stocks are set to fall to their lowest level in 3 years, but the low point stocks-to-use ratio of 18% is within normal bounds; this level of stocks
    should not lead to supply problems.

  • Perhaps part of the reason is this year’s drought in Sindh province, which will probably lead to reduced sugar production next year.
  • We forecast production will decline from 5.6m tonnes to 5.3m tonnes, which is below annual consumption at 5.5m tonnes.
  • This suggests that Pakistan might not export sugar at all in 2019/20. Keywords: Pakistan, Exports, Subsidy, White Sugar