July 10, 2007	Tuesday	Jamadi-us-Sani 24, 1428

LAHORE, July 9: As cement rates in the retail weakened to Rs180 per bag on Monday, the sugar prices gained yet another Rs70 per 100kg when the market re-opened after weekly holiday to hit the Rs2,870 levels.

The prices have posted fresh in spite of sufficient sugar lying with the mills and the government. The country’s total current stocks of more or less two million tonnes available with the private sector (1.5 to 1.6 million tonnes) and the state-run Trading Corporation of Pakistan (400,000 tonnes) are enough for the next six months’ requirements. The next sugar harvest is scheduled to start by November.

Supported by short supply from the mills, said the traders, the prices had gone up by Rs50 per 100kg at the weekend.

In the last couple of weeks, the sweetener’s wholesale prices have gone up by Rs240.

Traders alleged that the mills had formed a cartel to bolster their prices in the market and releasing the sweetener in short quantities.

The sugar prices have been under pressure since March because of what the millers dub as the government’s interventionist policy in the market. The government has been releasing 60,000-70,000 tonnes of sugar in the market since March through utility stores to successfully mark down its retail rates.

In the current fiscal year budget, the government announced to sell sugar for Rs25 per kilo through the utility stores as part of its Rs1.8 billion food subsidy programme for the lower-income groups.

The millers say the government had breached its commitment given at the commencement of the last sugar harvest in November last year. They claim that the government had assured the mills that it would not bring sugar imported through the TCP unless its ex-mill rates crossed the Rs31 per kilo and retail Rs34 per kilo levels. The government denies that it had given any such commitment to the millers.

Recently, the millers in Punjab called upon the government to purchase 500,000 tonnes from them for setting up a buffer stock as well as to enable them to offload their inventories so that the next harvest could commence on time.

They have warned that the mills will not be able to start next crushing on time if they continued to have carryover stocks from the previous season and if the prices are not bolstered to the promised ex-mill rate of Rs31 per kilo to save them from suffering further financial losses.

The next harvest is expected to be bumper one and sugar production is likely to reach 4.3 to 4.5 million tonnes, putting further pressure on its prices.

On the other hand, cement weakened to Rs180 per bag, lowest in several months, because of excess production and slowdown in exports and domestic consumption owing to rains.

The manufacturers are scheduled to meet on Tuesday (today) to consider the situation. If the past is anything to go by, the prices of the commodity are set to rise after the meeting.

In the past, the traders said, “We have seen that the cement prices start going up after all such meetings of the cement producers due to cartelisation.”