Sugar stocks in Egypt’s domestic market have topped 3 million tons for the first time, pushing prices at some companies down to about 20,000 to 21,000 Egyptian pounds ($400 to $420) per ton from 28,000 pounds ($560) at the end of June, despite higher demand ahead of the Prophet Muhammad’s birthday, two ministerial sources told Al Manassa.
Mostafa Abdel-Gawad, head of the Sugar Crops Council at the Ministry of Agriculture, said inventories reached record levels because of strong domestic production of sugar beet and sugarcane, along with increased private-sector imports taking advantage of the price differential between imported and local sugar.
Companies can import sugar for about 20,000 pounds ($400) per ton, including transportation and other costs, compared with domestic production costs of about 27,000 pounds ($540) per ton, encouraging importers to increase purchases from foreign markets, he said.
Abdel-Gawad said global sugar prices remain low, at about $450 per ton, despite a gradual increase from recent levels. Under normal market conditions, prices are around $600 per ton.
He added that sugar producers are struggling to sell their output domestically because of excess supply and price competition from imported sugar, leading some companies to fall behind on payments owed to farmers for sugar beet and sugarcane deliveries.
Government and private sugar companies have paid farmers about 12 billion pounds ($240 million) out of total dues estimated at roughly 16 billion pounds ($320 million), he said.
A source familiar with the sugar sector at the Ministry of Supply said continued arrivals of cheaper imported sugar are deepening the glut and putting further downward pressure on domestic prices.
The source called for exporting much of the sugar surplus to rebalance supply and demand and bring prices to a level “fair to producers and consumers.”
In May, Investment and Foreign Trade Minister Mohamed Farid extended a ban on exports of all types of sugar for three months, through the end of July. The ministry has yet to announce whether the ban has been extended or sugar exports formally allowed to resume.
The glut also comes as the government is reshaping sugar beet procurement around Mostaqbal Misr. State-owned companies halted contracts with farmers last month after securing beet from 100,000 feddans managed by the military-affiliated authority, even as falling prices and excess supply were already squeezing producers’ finances.
Sugarcane farmers have struggled with delayed payments since the delivery season began in late December, despite an announcement by the Ministry of Supply’s Holding Company for Food Industries that farmers would be paid within hours of delivering their crops.
Although the sugarcane delivery season officially ended in late May, farmers’ outstanding dues to companies exceeded 8 billion pounds ($160 million) at the time, according to a source at the Ministry of Supply’s Sugar and Integrated Industries Company in previous comments to Al Manassa. The amount has since fallen to about 4 billion pounds ($80 million).
Nine companies receive crops from farmers and produce sugar. Five are state-owned: Delta, Dakahlia, Nubaria, Fayoum, and Abu Qurqas. The four private companies are Nile, Alexandria, Canal, and Sharqiya.
