Favorable production brings down sugar prices

MANILA, Philippines - Favorable domestic and international sugar production is resulting in lower sugar prices.

According to Rosemarie Gumera of the Sugar Regulatory Administration’s policy and planning division, local sugar farmers are beginning to complain about the continued drop in millgate, wholesale sugar price which is down to a range of P1,170 to P1,130 per bag.

So far, Gumera said, the highest millsite price in Negros and Panay was only P1,280 per bag.

However, the lower mill site price, Gumera said, is not yet translating to lower retail prices which is still hovering from P44 to P50 per kilo for refined white sugar.

A continued decline in the mill site price, she said, may be reflected in the retail market after two weeks.

The SRA is projecting sugarcane production for this crop year to reach 2.4 million metric tons, similar to the previous crop year.

While the Philippines has ample supply of sugar it can export, Gumera said, increased production from the European Union and Russia (which is reporting higher sugar beet production), as well as announcements by Pakistan and India of higher sugar exports, is driving world sugar prices down also.

According to the USDA report, global sugar production for the 2011/12 marketing year is forecast at 168 million metric tons raw value, virtually unchanged from the initial May forecast but up four percent from last year.

Changes since May, the USDA report said, are highlighted by a 10-percent decline in production for Brazil which is mostly offset by the EU, Russia, and Thailand.

Production in Brazil was adversely affected by poor growing conditions.

Thailand’s production is a record on increased area combined with favorable weather conditions and better than expected yields.

EU production is now expected to be a record due to high yields, and increased area in response to measures by the European Commission to encourage production and stimulate demand from processors.

US production is forecast down primarily due to a drop in sugar beet production as cold wet weather led to late plantings and Minnesota and North Dakota experienced below average growing conditions.

Global exports for the 2011/12 marketing year are forecast at 57 million MT, one million MT over the May forecast and marginally higher than last year.

Exports from Mexico, Thailand, and the EU are expected to help fill the void left by reduced exportable product from Brazil.

Mexico’s exports are revised up due to attractive international prices, stronger United States demand, and less domestic consumption.

Thailand’s exports are forecast up on larger supplies from a bumper sugarcane crop and greater import demand as a result of reduced exportable supplies from Brazil.

The EU has opened higher export quotas and there are reports of an additional export quota before the end of the sugar beet processing campaign.

The EU made a similar move during the record 2009 crop.

Global consumption is forecast at a record 159 million MT, but down 2 million MT from the May forecast largely because of India and Brazil.

The rate of India’s consumption growth has been lowered from the May forecast as more supplies are shifted to the high priced, export market.

Brazil’s sharply smaller crop means less supply for domestic consumption and exports.

Ending stocks are forecast at 30 million MT, up one million MT from the May forecast and slightly higher than the previous year.