Egypt awaits sugar price fall to resume buying

CAIRO, Sunday

Egypt wants to see a further fall in global sugar prices before resuming its raw sugar purchases, an official at the state-owned Sugar and Integrated Industries Company (SIIC) told Reuters today.

“We are waiting for a price improvement,” the official said.

He did not say at what price he would issue a new tender but he was speaking after New York’s May raw sugar futures vaulted higher on Friday to settle at 22.19 cents per lb.

Global sugar prices have slid by some 30 per cent since end-January, when prices had touched a 29-year peak. Still, prices are up more than 70 per cent compared with where they were in early March 2009.

High prices prompted SIIC to cancel its latest tender to buy 50,000 tonnes of raw sugar in end-January.

“There is no certain time on when to restart the purchases,” the official added.

Egypt said on January 6 it would import 1 million tonnes of raw sugar to meet demand in the second half of 2010 and to meet its reserve quota for the beginning of 2011.

The country consumes around 2.8 million tonnes of sugar a year and produces 1.6 million tonnes.

Some 63 million of Egypt’s 78 million people are covered by subsidy card programmes through which sugar is available at reduced prices.

Trade minister Rachid Mohamed Rachid had said higher world prices would push Egypt’s sugar subsidy bill in 2009/10 up by more than 70 per cent to 4 billion Egyptian pounds ($730 million).

Meanwhile, Egypt’s most closely watched indicator of prices - will slide, and the implications for the central bank’s key overnight interest rates, which the central bank kept unchanged on February 4.

Three out of six analysts saw annual urban inflation rising to a year high.

The central bank’s decision last month marks the third pause since the bank began a series of rate cuts 12 months ago.

Four out of six analysts polled by Reuters forecast core annual inflation slipping to an average of 7.25 per cent in the year to February compared to 7.39 percent in January. Forecasts range from a decline to 7 percent to a rise to 7.6 per cent. (Reuters)