https://malaya.com.ph/business/shipping-transportation/sugar-prices-drop-on-oversupply/
18 November 2024
Sugar prices have been plummeting for three consecutive weeks, despite the announcement of the Department of Agriculture and Sugar Regulatory Administration that there is no immediate need for additional import, the Sugar Council and the National Congress of Unions in the Sugarcane Industry (NACUSIP) said.
Top officials of the DA and SRA have disclosed earlier that amid the steady domestic supply of both raw and refined sugar, the Philippine government will not pursue importation until the middle of next year.
“Given the current situation, SRA Administrator Pablo Luis Azcona and I agreed that a decision on sugar importation could be delayed until after May, when the current harvest season ends,” Agriculture Secretary Francisco Tiu Laurel Jr. said in a statement recently released to the media.
In a joint statement, NACUSIP and the Sugar Council, composed of three sugar federations, including the National Federation of Sugarcane Planters (NFSP), Confederation of Sugar Producers Association Inc. (CONFED), and the Panay Federation of Sugarcane Farmers Inc. (PANAYFED), said the statement was apparently meant to allay fears that more importation would cause a further drop in sugar prices.
However, they said that both the DA and SRA failed to explain why sugar prices have steadily dropped over the past few weeks.
The Sugar Council and NACUSIP noted a drop of sugar prices at the Hawaiian Philippine Company (HPCO), from P2,980.88 per bag on October 20 to P2,815.99 per bag on November 10, a price drop of P164.89 per bag in only three weeks. In other mills, sugar prices dropped to much lower rates as early as November 3, the two groups pointed out.
“An apparent decrease in demand has consequently caused the steady drop in prices,” the Sugar Council and NACUSIP said, stressing that it is a concern which the SRA should address, as it reiterated their worry over the current over-supply of imported and locally-produced sugar, relative to demand, in the market.
In a report of the SRA Supply-Demand Situation Report dated October 20 this year, of the 240,000MT imported refined sugar authorized by Sugar Order No. 5, signed on August 8, this year, only 135,833.20MT has entered the market, according to the Sugar Council and NACUSIP, noting that mill gate prices are trending down, with a balance of 104,167MT.
“The Sugar Order recommends eligible importers to bring their volumes in by September 15, 2024, classified as C-sugar. Does this mean that the balance volume will remain classified as C-sugar until after next year, because of the “no importation” pronouncement of the DA,” they asked.
They added that significantly, the same SRA report showed that as of October 20, withdrawals for raw sugar dropped by 18.38 percent, while refined sugar withdrawals dropped by 20.18 percent, compared to the same period last crop year.
What is equally worrisome is the fact that only 1,314MT of refined sugar was produced by refineries as of October 20, compared to 58,990MT in the same period last year, which is a drop of more than 97 percent, the Sugar Council and NACUSIP said.
Noting that a considerable amount of locally produced raw sugar is withdrawn for refining. But if there is more than enough supply of imported refined sugar, it makes no business sense for refineries to withdraw raw sugar. Hence, demand for it goes down and mill gate prices drop, they further said
“It takes no stretch of the imagination to connect the drops in domestic demand and sugar prices to the entry of imported sugar, aside from sugar substitutes,” the Council and NACUSIP said, adding that “the statement that there will be no importation until the end of harvest next year is therefore a case of closing the stable doors after the horse has bolted.”
“If the ‘no further importation’ pronouncement aims to arrest the drop in mill gate sugar prices over the past weeks,” they claimed, “the fundamentals to firm up prices are woefully absent.”*