Arshad Mahmood Awan
If banking advances data from December 2025 is any indication, Pakistan’s sugar sector may be rediscovering something it has long struggled with: functioning normally when interference is minimal. The sharp jump in pledged sugar stocks during December points to one clear development — crushing activity has picked up, mills are producing at pace, and sugar is steadily flowing into inventories.
This shift is already being felt in the market. Retail sugar prices, which remained stubbornly high for much of 2025 despite repeated assurances of adequate supply, have finally begun to ease. The downward trend that emerged in December carried into January 2026, marking the first sustained price softening in months. Instead of resistance and artificial tightness, the market is showing signs of release.
The timing is important. The monsoon floods of 2025 caused understandable anxiety around cane availability and crop damage, but they were never meant to be the final word on supply. Cane harvesting began earlier than usual this season, starting in November, and is expected to continue through April 2026. This places the industry squarely in the middle of the crushing season, not at its end. Early-season fears of an acute sugar shortage may therefore have been overstated.
December’s surge in inventories could simply be the opening act. As the crushing season progresses and supply becomes more visible, especially with peak consumption approaching earlier this year due to Ramzan and the extended summer demand cycle, the market may see further easing. Historically, demand tends to rise sharply during this period, but if production momentum holds, supply could keep pace.
Still, caution is warranted. Pakistan’s sugar market has a long memory, and it is rarely straightforward. In past cycles, higher production did not always translate into meaningful price relief for consumers. Stocks were often built up, pledged with banks, and strategically withheld from the market. The result was a managed balance — enough sugar to avoid panic, but not enough visible supply to force prices down decisively.
This season, however, appears to carry a subtle but important difference. Prices are not merely flatlining; they are actually declining. That suggests inventories are, at least for now, moving through the system rather than being used to manufacture scarcity. Mills seem to be releasing sugar instead of locking it away, allowing market forces to operate more freely than usual.
Yet it would be premature to declare this a surplus year. A spike in pledged stocks in December can be read in two very different ways. On one hand, it may signal a genuine production upswing that eventually overwhelms domestic demand, pushing prices lower as the season matures. On the other, it could reflect front-loaded crushing combined with inventory financing — now a routine feature of the industry — setting the stage for a more controlled release later in the year.
The real test will come by late March. By then, most of the crop will have been crushed, and the industry’s willingness to continue holding inventory will be under pressure. If stocks keep accumulating through April, it will become increasingly difficult to maintain elevated prices without triggering regulatory or political backlash.
External conditions also matter, and this year they are unusually unsupportive of price manipulation. Global sugar prices remain at multi-year lows, limiting the industry’s ability to justify higher domestic prices through export parity arguments. Imports, while not actively pursued, remain a viable backstop. Together, these factors weaken the traditional narratives used to defend domestic tightness.
This places the spotlight squarely on domestic behaviour. If production continues at its current pace and inventories keep rising, Pakistan could end the season with surplus supply. In that scenario, price softening would likely persist, forcing the industry to absorb some margin compression.
Alternatively, if inventory accumulation slows and pledged stocks become a tool for timing market releases rather than clearing excess supply, the market may settle into a familiar pattern — balanced, stable, but offering little real relief to consumers.
For now, the most honest outlook remains conditional. The data does not point to a crisis, but it also does not justify complacency. The sugar market is moving, not frozen. Prices are easing, but not collapsing. Whether this evolves into a true surplus year by summer, or merely another episode of carefully managed balance, will depend less on weather and more on whether supply is allowed to behave like supply.
