SRA rechannels world market sugar for local use

MANILA, Philippines - The Sugar Regulatory Administration (SRA) is allowing the reclassification of unshipped world market sugar to the domestic market to stabilize local supply and bring down prices.

In an order passed on May 23, the SRA board allowed the conversion of world market sugar “D” quedans to domestic sugar “B” quedans to bring down sugar prices that have been rising steadily since January.

“SRA records show that significant volume of ‘D’ or world market sugar has remained unshipped which can be utilized to alleviate the perceived tightness in domestic sugar stock balance,” the order stated.

The SRA is considering the conversion of between 75,000 metric tons (MT) to 100,000 MT of unshipped “D” sugar but this may still change after the verification of available “D” sugar for conversion by May 31.

The SRA, in collaboration with the mills, would determine the conversion right of each planter and the millers themselves.

All sugar producers—planters and millers must submit their “D” quedans for verification before the said date to qualify for coversion. The SRA would then issue an order specifying the volume of verified “D” sugar that could be converted to “B.”

“D sugar quedans that are unverified after the said deadline shall not be accepted for conversion to B,” said the order.

The conversion rights may be traded but must be used by July 1 or would be invalidated.

The order is effective immediately.

After the reclassification, the total buffer stocks of raw and refined sugar in the domestic market would rise slightly to 275,000 MT from the standard buffer stock level of 250,000 MT maintained at the end of every crop year.

Buffer stocks of “A” or US quota sugar and “D” sugar would also be maintained at 22,000 MT and 10,000 MT to supply foreign buyers during the lean months of sugar production.

SRA administrator Regina Martin said stakeholders in the sugar industry have been consulted about the issuance of the reclassification order.

“The SRA will ensure that free market forces will prevail as mandated by its charter and will not intervene in the negotiation process between the sugar producers and the sugar traders,” she said.

Domestic millsite and wholesale price of sugar have been rising despite sufficient supply because of strong demand and speculations of supply tightness at the end of the cropping year in August.

The average domestic millsite price of raw sugar has risen to P1, 688 per 50-kilogram bag in May from P1, 411 per 50-kilogram bag in January.

The average wholesale price of refined sugar in Metro Manila has risen to P2, 292 per 50-kilogram bag in May from P2, 036 per 50-kilogram bag in January.

Sugar production this year is expected to exceed the production target of 2.35 million MT to reach 2.40 million MT because of good weather conditions prevailing over major sugar production areas in the country.

Domestic demand, meanwhile, is seen to rise to 2.2 million MT for the current crop year against P2.18 million MT in the previous cropping season.