Sugar exporters expecting additional allocations to US

SUGAR EXPORTERS expect the United States to raise the Philippines’ allocation in raw sugar imports next year.

"We in the industry feel that the US will increase the volume of its importation in April [next year] to reach the stock-to-use [supply-demand] ratio of 14%," Francisco D. Varua, executive vice-president of the Philippine Sugar Millers Association, Inc. (PSMA), said in a recent phone interview.

Agricultural damage by the recent Hurricane Gustav in the sugar-producing state of Louisiana resulted in a drop in stock-to-use ratio to 4.6% from a previously already-low 7.0%.

A ratio of 14%-15% is considered ideal for price stability, Mr. Varua said.

Mr. Varua said the Philippine sugar industry expects a 500,000 MT increase in global tariff rate quota (TRQ) for raw sugar, due to low US production, increasing the Philippines’ allotment by 67,500 MT.

The USDA projects sugar output to fall to 3.628 million metric tons in 2008-09 from the earlier estimates of 3.756 MMT, partly because of agricultural damage caused by Hurricane Gustav.

Last Sept. 17, the US Trade Representative announced that the TRQ for the Philippines remained at some 142,160 MT, same as last year.

"We are expecting the TRQ to increase [in the 2009 fiscal year]," Aida F. Ignacio, assistant administrator of the Sugar Regulatory Administration, said in a separate phone interview.

Ms. Ignacio recalled that a 76,657 MT increase in raw sugar TRQ followed in the wake of Hurricane Katrina in 2005.

Based on the raw sugar allocation for the 2009 fiscal year, the Philippines has the third largest allocation of raw cane sugar imports, next to the Dominican Republic’s and Brazil’s allocations of 185,335 MT and 152,691 MT, respectively.

The USDA increased the TRQ for raw sugar to 1.117 MMT from 1.11 MMT in the 2008 fiscal year.

Of the country’s 142,160 MMT raw sugar TRQ in the 2008 fiscal year, 125,200 MT had been delivered, Ms. Ignacio said.

Exporters are also bullish that freight costs will decrease as fuel prices ease. Mr. Varua said freight charges have risen to $130 per ton of sugar from only $30 per ton two years ago.

However, Philippine sugar production in the 2008-2009 planting season could fall by 8% to 2.23 million metric tons from the 25-year-high of 2.427 MMT in 2007-2008 due to high costs of fertilizers, which account for up to 30% of crop production costs.

source:bworldonline