The Philippines has reduced its sugar stocks for exports by 90,000 tonnes, or a third of the allocation for world markets for the 2013/14 crop year, to boost domestic supply and arrest further local price increases, the industry regulator said. The move is not expected to have an impact on an over supplied global market and the country's export commitment to the United States. But it could help ease rising food inflation that has become a concern for the Southeast Asian nation's central bank.
Rising domestic demand and government efforts to curb smuggling of the commodity have pushed local sugar prices higher in recent months, the Sugar Regulatory Administration (SRA) said in a statement on Tuesday. Domestic millsite prices have gone up by as much as 20 percent to 1,688 pesos ($39) per 50-kilogram bag as of last month, from 1,411 pesos in January, the state agency said.
The SRA expects the country's buffer stocks of raw and refined sugar to be at around 275,000 tonnes at the end of 2013/2014 crop year in August as a result of the policy move. The country's standard buffer stock level is pegged at 250,000 tonnes. The SRA forecasts domestic consumption of raw and refined sugar in the current crop year to reach 2.2 million tonnes and 1.1 million tonnes, up 1 percent and 9 percent respectively from the previous crop year.
Philippine inflation quickened in May to a two-and-a-half year high on costlier food and utilities, and some analysts see the possibility of the central bank raising key interest rates on June 19. The Philippines is considered a minor player in global sugar trade due to its high production costs, but is a major sugarcane producer and typically one of the largest US sugar quota recipients.
Total raw sugar exports by the Philippines for 2013/2014 are forecast to reach 300,000 tonnes, bulk of which will go to countries other than the US, according to a recent report issued by a US Department of Agriculture attache in the Philippines. Philippine sugar consumption is growing due to the country's strong economic growth and a rapidly developing food processing industry, the report said. The SRA said the Philippines was looking to export 150,000 tonnes to the world market in 2013/2014 and could comply with its annual quota commitment to ship 136,000 tonnes to the US.
