An oversupply of sugar in the United States may compel the Philippines to reduce the volume of exports to the US during the current crop year ending in September, the Sugar Regulatory Administration (SRA) said Friday.
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The abundance of raw sugar from Mexico, which falls under zero-tariff and zero-quota arrangements with Washington, is the main reason for the oversupply in the US, SRA board member Cocoy Barrera said in an interview with reporters. “Philippine sugar is not as attractive as Mexico sugar, so we will reduce our export volume to the US this crop year,” said Barrera. “But we will be keeping our regular US sugar quota,” he added. In a separate statement e-mailed to the media Thursday, the SRA noted Philippine raw sugar bound for the US fetches millsite prices of P 643 per 50-kilo bag compared to “D” or world market sugar which is P 715 per 50-kilo bag. However, “B” or domestic sugar fetches P 1,435 per 50-kilo bag. The composite price of Philippine sugar is placed at P1,298 per 50-kilogram bag. Still, the Philippines gets to keep it regular US sugar quota of 138,827 metric tons (MT) for the year. “We have already sought advice from the US government and they have agreed that this will not be taken against us,” said Barrera. A shipload of 23,600 metric tons is set to sail for the US at the end of June, on top of the 27,160 MT of the commodity already shipped to the US, according to the SRA. A final shipment of a still undetermined amount were still being worked out by exporters. “We are still verifying the amount that could be exported,” Barrera noted. The SRA is mulling over an advanced shipment to the US for the next crop year, said SRA administrator Ma. Regina Martin, noting the allocation for “A” sugar will be reduced while the volume for “D” sugar will be increased. The export volume of 180,000 MT for the world market would be kept this year, with 141,000 MT already allotted for for shipment as of June, according to SRA. Philippine sugar production reached 2.448 million MT as of June 2, up by 0.6 percent from revised 2.434 million MT SRA estimate for crop year 2012-2013.
With the milling season still open and several millers still operating, the June 2 actual production level will likely increase, Rosemarie Gumera, SRA manager for policy & planning department, noted in a text message to reporters.
The Philippines aims to sell more sugar to the United States in the current 2013/14 crop year under its annual rate quota program, but the devastating Typhoon Yolanda (Haiyan) could determine the quantity, a senior industry official said on Tuesday.
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"For US export, we are prepared to ship out our whole quota of 136,000 metric tonnes for crop year 13/14. But that will depend on market situation in the US," Regina Bautista-Martin, chief of Sugar Regulatory Administration, told Reuters by e-mail. "The typhoon may affect it, not so much the global prices. We shipped 53,000 to the United States in crop year 12/13." Bautista-Martin gave no further details, but she said on Monday between 50,000 tons and 100,000 tons of raw sugar may have been lost in Typhoon Haiyan, which tore a path through islands in the central Philippines on Friday and killed an estimated 10,000 people in one city alone. The Philippines, which accounts for about 1.3 percent of global output, consumes most of its production, which has been estimated at 2.5 million tons for the 2013/14 crop year. The country's regular US quota allocation is 138,000 tons, but exports in the previous crop year were much below target because of ample US supplies and a drop in global prices to three-year lows, dealers said.
The Sugar Regulatory Administration (SRA) has raised its estimate for sugar production this year from 2.356 million metric tons (MT) to 2.434 million MT due to good production.
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"With good production figures being reported by our monitoring personnel, the SRA Board deemed it appropriate to adopt at this time the higher range of the estimate," said SRA Administrator Ma. Regina Martin.
As of April 14, raw sugar production was at 2.295 million MT, up 13.83 percent from 2.016 million MT in the same period in 2012. Refined sugar production increased 10.78 percent to 859,131 MT from 775,523 MT.
The current crop year is expected to end in June.
Also as of April 14, the demand for domestic raw sugar rose 16.20 percent year on year to 1.412 million MT from 1.215 million MT. Refined sugar demand also rose by 11.65 percent to 615,496 MT from 551,248 MT.
"With healthy production figures, the SRA Board decided not to adopt any advance swapping or sugar conversion program for the remaining months of the crop year," said Martin.
The Philippines will also keep its regular US sugar quota of 138,827 MT.
Martin is set to leave for Washington next week to discuss the Philippines' US sugar quota. The 2013 Farm Bill, which includes its sugar program, is currently up for deliberation in the US Congress. The US will also discuss its general system of preferences, which allows Philippine raw sugar to enter the country duty-free. The GSP is set to expire on July 31
The Sugar Regulatory Administration (SRA) on Friday encouraged bioethanol producers to use more of the surplus sugar in warehouses and help the sugarcane sector diversify, considering that world prices of the commodity remain volatile.
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“Administrator Ma. Regina Martin reiterated that in support of the diversification efforts of thePhilippine sugarcane industry and in order to expand the market of sugar, the use of "D" or world market sugar for the production of bioethanol... is encouraged,” SRA noted in an e-mailed statement. "Price situation in the world market remains volatile and the bioethanol mandate could very well absorb the surplus sugar at viable price levels," according to the SRA chief. SRA data showed actual shipments to the world market totaled 140,000 metric tons (MT) as of August 2. Sugar production in crop year 2012-2013 reached 2.457 million MT, up 9.5 percent year-on-year. On Friday, the administration issued Sugar Order 1 which specifies that 86 percent of output be allocated to the domestic market, 12 percent to the world market, and 2 percent to fill the US quota. Allocation for "A" sugar or US sugar quota will be minimal this year taking into consideration the 57,000 MT that were not shipped in the crop year that just closed. The Philippines enjoys a regular US quota of 138,000 MT, but only 53,690 metric tons were shipped to the US as prices have sagged because of an oversupply in the mainland and the unlimited access enjoyed by Mexican sugar to the US market. SRA allowed unshipped "A" sugar to be reclassified as "D" sugar, but there is still a considerable amount of reclassified sugar in warehouses. "The US market continues to be a reliable market and remains an instrument to stabilize domestic sugar supply that its allocation is imperative regardless of volume," Martin noted in Sugar Order 1.
For crop year 2013-2014, SRA expects product to reach 2.45 million MT or hardly changed from the 2012-2013 output.