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Bitter outlook for sugar prices in Egypt - Daily News Egypt

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Bitter outlook for sugar prices in Egypt

CAIRO: Despite government measures to mitigate the effects of surging global sugar prices, they are steadily continuing their upward trend in the local market. Since the beginning of the year, sugar prices have shot up 100 percent in Egypt, reaching LE 5 per kg in some areas from LE 2.5 per kg, leading the government …


CAIRO: Despite government measures to mitigate the effects of surging global sugar prices, they are steadily continuing their upward trend in the local market.

Since the beginning of the year, sugar prices have shot up 100 percent in Egypt, reaching LE 5 per kg in some areas from LE 2.5 per kg, leading the government to temporarily suspend tariffs on sugar imports.

According to the USDA Economic Research Service, prices have surged 76 percent in 2009 with futures trading around 20 cents a pound. The previous year, world sugar prices increased by more than 20 percent in response to rising gasoline prices.

Wholesalers quickly raised local prices to match global levels, stirring controversy since their reserves were bought when prices were low, according to Mohamed Anwar Mosleh, deputy chairman of the grocery stores and food products unit at the Federation of Egyptian Chambers of Commerce.

“Sugar is a basic commodity and [current] prices exceed the affordability of all [income] levels, he told Daily News Egypt.

“The sharp increase in international sugar prices witnessed over the recent period is due to a shortage in global sugar supply in central markets such as India, Brazil and Thailand, which underwent unfavorable weather conditions; hence, negatively affecting their harvesting seasons, Beltone Financial said in a research note.

On Oct. 5, heavy rains in Maharashtra, India’s largest sugar-producing state, damaged some cane crops ahead of harvests, a producers’ group told Bloomberg, which adds further pressure on prices.

Mosleh put the “blame on the main sugar suppliers in the local market, saying they are compounding the problem.

Ahmed Al-Wakeel, deputy chairman of the Federation of Egyptian Chambers of Commerce and a major sugar importer, clarified the situation in the local market in an interview with Daily News Egypt.

There are five companies that import almost 900,000 out of the 1.2 million imported tons of sugar, in addition to the 1.6 million tons produced locally.

According to Al-Wakeel, these companies have been the main market players over the past 10 to 15 years. Al-Wakeel himself owns one of these companies but refused to mention its name.

A committee on prices formed by the Alexandria Chamber of Commerce recommended a fixed retail price of LE 4 per kg for October 2009.

Al-Wakeel says the “retail price should not exceed LE 4 per kg and wholesale should not exceed LE 3,750 per ton. However, prices in some areas in Cairo reached LE 5 per kg.

“The committee should meet by the end of the month to revise the price in light of the main development in global prices, said Al-Wakeel, who also heads the Alexandria Chamber of Commerce.

Egypt has enough supplies for four months, according to Al-Wakeel.

On Wednesday, the trade minister said Egypt has sugar stocks for up to 10 months, while higher world prices will push up the sugar subsidy bill in 2009/10 by more than 70 percent to LE 4 billion ($730 million), reported Reuters.

Egypt said in August it has reserves to last until the end of 2009. Trade Minister Rachid Mohamed Rachid has also voiced concern about the inflationary impact of higher world sugar prices, with raw sugar futures still near a 28-1/2-year peak.

Al-Wakeel expects prices to remain unstable for a while, citing bad weather conditions in some places where global supplies of sugar are produced.

“The rising prices will not affect a big segment of Egyptian people, he added, “71 percent of the population is covered by sugar subsides, bringing the price down to LE 2 per kg.

“Around 29 percent will be affected, and 20 percent of those can afford it, he added.

Ahmed Genina, chairman of Tsepas pastry, one of the oldest chains of pastry shops in Greater Cairo, told Daily News Egypt that the recent increase in prices has not yet reflected on the end products.

Topics: FJP

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https://dailyfeed.dailynewsegypt.com/2009/10/08/bitter-outlook-for-sugar-prices-in-egypt/
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