Traders show little interest in sugar importation

MANILA, Philippines - The tight sugar situation appears to be easing up, with traders showing little interest in yesterday’s auction for the right to import up to 60,000 metric tons of refined sugar.

Actual bids yesterday amounted to a mere 16,000 MT, not even a third of the total volume up for bidding.

The NFA said it will schedule a second auction for the remaining volume of 44,000 MT.

Of the 19 that initially purchased bid documents from the National Food Authority (NFA), only nine firms actually submitted bids, with only seven qualifying to bid.

Of the 16,000-MT total bids, Coca Cola Bottlers Philippines, Inc. Del Monte Philippines and other industrial users accounted for 10,000 MT, half the 20,000 MT originally allocated for the sector.

Institutional users made a bid for only 1,000 metric tons, while food processors went for 2,350 MT.

Retailers and repackers wanted to buy only 2,650 MT, although they had an allocation of 22,000 MT.

According to Sugar Regulatory Administration representative Rosemarie Gumera, the low volume was within the expectation of the SRA.

The NFA, though surprised, said traders that the market may just be testing the market and will make their move during the second auction for the remaining 44,000 MT.

Gumera agreed that the second auction may see more bidders, depending on the sugar situation.

The bid committee is expected to announce the award results of yesterday’s auction on Feb. 26.

According to NFA director Romeo Jimenez, the NFA and SRA would have to discuss when a second auction would be held for the remaining 44,000 MT.

Jimenez said that if the remaining 44,000 MT is still not fully subscribed after the second auction, the NFA has reserved the right to allocate the remaining amount on top of the second tranche of 90,000 MT under the sugar industry’s export replacement scheme.

The SRA had approved a total importation of up to 150,000 MT in response to a sugar shortage that temporarily pushed up domestic sugar prices to as high as P60 per kilo last month.

Sugar prices appear to have stabilized at around P54 to a kilo.

The SRA had previously argued that there is really no need to import sugar as there is adequate domestic production and that the domestic producers were merely tracking international market prices.