Sugar Situation and Outlook

An Expert's View about Agriculture and Animal Husbandry in the Philippines

Posted on: 31 Oct 2011

Philippine raw sugar production increased 21 percent to 2.4 million metric tons (MMT) in Crop Year 2010/11 (September to August), while cane production rose 33 percent to 25,900 MMT over the same period.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: GAIN Report Number: Philippines Sugar Semi-annual Sugar Situation and Outlook Approved By: William Verzani Prepared By: Pia Ang Report Highlights: Philippine raw sugar production increased 21 percent to 2.4 million metric tons (MMT) in Crop Year 2010/11 (September to August), while cane production rose 33 percent to 25,900 MMT over the same period. The increase was due mainly to higher yields from favorable weather conditions as well as a price-induced expansion in sugarcane area. Despite a small increase in sugarcane area, the Philippine Sugar Regulatory Administration (SRA) projects raw sugar production in 2011/12 to be the same. The SRA has said that they expect to export at least 300,000 MT of raw and refined sugar to the world market in addition to the U.S. quota of 144,901 Metric Tons Raw Value (MTRV). Negligible damage to the sugarcane crop was reported from the multiple typhoons that passed through the Philippines in the summer and fall of 2011. Commodities: Sugar, Centrifugal Sugar Cane for Centrifugal Production: According to the Philippine Sugar Regulatory Administration (SRA), Philippine raw sugar production increased 21 percent to 2.4 million metric tons (MMT) in Crop Year 2010/11 (September to August), while cane production rose 33 percent to 25,900 MMT over the same period, due mainly to higher yields from favorable weather conditions as well as a price-induced increase in sugarcane area. Raw sugar production in 2011/12 is projected to remain at about the same level despite the increase in sugarcane area from 390,000 hectares (ha) to 400,000 ha. Minimal damage to the sugarcane crop is reported from typhoons Pedring and Quiel, which passed through the northern Philippines, as the vast majority of sugarcane production is concentrated in the central and southern regions of the country. Within the next three years, the Philippine Department of Agriculture (DA) aims to expand the sugarcane planted area from 400,000 hectares (ha) to 470,000 ha, increase farm productivity from 63 tons cane per hectare (TC/H) to 75 TC/H and raise sugar yield from 1.9 bags per ton cane to 2.1 bags per ton cane through a new DA initiative called the Sugarcane Industry Roadmap, a program that promotes block farming and mechanization. While there is no formal trade in sugarcane due to the unique ?quedan? system (Under this arrangement a sugarcane planter allocates a percentage of his output to the mill in payment for the processing of the cane. The mill then issues a warehouse receipt, called a quedan, to the farmer representing his share of the sugar), industry sources report that a metric ton of sugarcane can be roughly valued at about P2,900 (based on P2,300/50-kg bag of raw sugar). In CY 2010/11, the average mill site price of ?A? raw sugar for the U.S. market was P1,388.48/50-kg bag, up nine percent from P1,281.31/bag the previous year. Average millsite price for ?B? raw sugar for the domestic market was P1,899.77/50-kg bag, up 20 percent from P1,587.80 the previous year. The average composite price was P1,863.98, up 20 percent from the 2009/10 price of P1,554.25. Wholesale and retail prices of raw and refined sugar in Metro Manila for CY2010/11 follow: DOMESTIC RAW AND REFINED SUGAR PRICES Raw Sugar Refined Sugar Wholesale Price Retail Price Wholesale Price Retail Price CY 2010/11 (Pesos/per (Pesos/ (Pesos/per (Pesos/ 50 Kg. Bag) per Kg.) 50 Kg. Bag) per Kg.) September 2,300.00 51.00 2,600.00 56.00 October 2,500.00 52.00 2,700.00 56.00 November 2,550.00 55.00 2,850.00 58.00 December 2,650.00 57.00 3,150.00 64.00 January 2,500.00 60.00 3,000.00 64.00 February 2,400.00 60.00 2,800.00 64.00 March 2,100.00 60.00 2,600.00 64.00 April 2,000.00 54.00 2,500.00 62.00 May 1,900.00 50.00 2,400.00 60.00 June 1,550.00 50.00 2,050.00 60.00 July 1,430.00 44.00 1,950.00 50.00 August 1,350.00 40.00 1,850.00 50.00 AVERAGE 2,102.50 52.75 2,537.50 59.00 Source: Sugar Regulatory Administration As of September 20, 2011, the prevailing wholesale price of raw sugar was at P1,446.20, while the wholesale price for refined sugar was at P1,932.00/50-kg bag. The prevailing retail price of raw sugar was P40.06/kg, while the refined sugar price was P47.05/kg. U.S. Dollar to Philippine Peso Exchange Rates from 2007 to September 30, 2011 follow: Exchange Rate 2007 2008 2009 2010 Sept. 30, 2011 US1$=PhP 46.15 44.47 47.64 45.11 43.79 Source: Bangko Sentral ng Pilipinas Consumption: Domestic sugar consumption has been traditionally measured by monitoring sugar withdrawals from the mills. Domestic sugar withdrawals only reached 1.716 MMT in CY 2010/11 due to a reported shift by industrial users from cane sugar to other sweeteners. As a result, ending stocks of raw sugar increased significantly. Accordingly, the price of raw sugar fell from a high of P2,650/50-kg bag in December 2010 to P1,350/bag in August 2011 and refined sugar prices dropped from a high of P2,600/50-kg bag in September 2010 to about P1,850/bag in August 2011. Industrial demand for local sugar is expected to strengthen with the reported decline in domestic sugar prices. RAW SUGAR (DOMESTIC) WITHDRAWALS CY 2010/11 MONTH METRIC TONS (MT) September 35,608 October 69,881 November 86,266 December 124,984 January 167,546 February 205,651 March 210,924 April 202,628 May 178,174 June 178,397 July 144,750 August 111,696 TOTAL 1,716,505 Source: Sugar Regulatory Administration MOLASSES PRICES CY 2010/11 Average Price MONTH (Pesos/MT) September 8,773.75 October 9,059.61 November 9,169.23 December 7,522.23 January 6,799.42 February 6,552.68 March 5,411.88 April 4,527.50 May 3,022.67 June 2,818.99 July 2,406.50 August 2,605.00 AVERAGE 5,722.46 Source: Sugar Regulatory Administration Trade: Raw sugar exports to the U.S. for 2011/12, under the U.S Tariff Rate Quota Program, are set at 144,901 MT (138,827 MT Commercial Weight), up slightly from the initial 142,160 MTRV allocated in the previous year. In addition, with increased sugarcane production predicted for this year, the SRA expects the Philippines to export at least 300,000 MT of raw and refined sugar to the rest of the world. No imports are expected for CY 2011/12 due to projected adequate sugar production for the current crop year. Policy: ASEAN: Under the ASEAN Free Trade Agreement (AFTA) agreement, the tariff on sugar from ASEAN countries will be reduced from the current 38 percent to 28 percent next year, then to 18 percent in 2013. The rate will go down to 10 percent in 2014 and finally to five percent in 2015. The Philippine DA aims to make the country?s sugar industry globally competitive in time for the full implementation of AFTA through programs such as the Sugar Industry Roadmap which will promote block farming or the operational consolidation of small farms to take advantage of plantation scale production. Production, Supply and Demand Data Statistics: Sugar, Centrifugal 2009/2010 2010/2011 2011/2012 Philippines Market Year Begin: Sep Market Year Begin: Sep Market Year Begin: Sep 2009 2010 2011 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 322 322 394 394 392 842 Beet Sugar Production 0 0 0 0 0 0 Cane Sugar Production 2,000 2,000 2,200 2,400 2,100 2,400 Total Sugar Production 2,000 2,000 2,200 2,400 2,100 2,400 Raw Imports 0 0 0 0 0 0 Refined Imp.(Raw Val) 250 250 0 0 0 0 Total Imports 250 250 0 0 0 0 Total Supply 2,572 2,572 2,594 2,794 2,492 3,242 Raw Exports 178 178 202 202 142 395 Refined Exp.(Raw Val) 0 0 0 0 0 50 Total Exports 178 178 202 202 142 445 Human Dom. Consumption 2,000 2,000 2,000 1,750 2,000 2,000 Other Disappearance 0 0 0 0 0 0 Total Use 2,000 2,000 2,000 1,750 2,000 2,000 Ending Stocks 394 394 392 842 350 797 Total Distribution 2,572 2,572 2,594 2,794 2,492 3,242 1000 MT Sugar Cane for Centrifugal 2009/2010 2010/2011 2011/2012 Philippines Market Year Begin: Sep Market Year Begin: Sep Market Year Begin: Sep 2009 2010 2011 USDA USDA Of N USDA ew Post ficial Of New Post New Post ficial Official Area Planted 404 388 404 395 405 Area Harvested 400 383 400 390 400 Production 19,500 19,500 20,500 25,900 26,000 Total Supply 19,500 19,500 20,500 25,900 26,000 Utilization for Sugar 19,500 19,500 20,500 25,900 26,000 Utilizatn for Alcohol 0 0 Total Utilization 19,500 19,500 20,500 25,900 26,000 1000 HA, 1000 MT
Posted: 31 October 2011

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