SRA expects sugar prices to ‘stabilize’ over the next 2 months

Although inflation fell to 6.3% in August from a four-year high of 6.4% in July, economists said it had yet to peak, leaving room for more further rate hikes. (Photo by Rolly Salvador)

Refined sugar prices will begin to stabilize next month and could rise to 70 to 80 pesos per kilogram by November, according to the Sugar Regulatory Administration (SRA).

SRA Administrator David Alba told a briefing yesterday that by November all sugar refineries will be running at full capacity and the 150,000 metric tonnes (MT) of imported sugar will have arrived.

“It will stabilize, we can say categorically that it will stabilize because everyone will start grinding. Barring another typhoon like “Odette”, the rods look good. Hopefully if this continues, if the trend continues, we will have more sugar than we estimated,” Alba said.

Pablo Azcona, representative of the SRA outgrowers, said farmers are generally blamed for the high retail price of sugar, even though their farmgate and factory prices are lower.

“It is a big misinterpretation that farmers earn so much because sugar is sold at high prices in the market… Most farmers only produce brown and then to turn brown sugar into white, you add about P10 to P12 of the crude and then you refine it,” Azcona explained.

Based on the Ministry of Agriculture’s monitoring of 13 public markets in the National Capital Region, prevailing retail prices as of yesterday were still 95 pesos per kg for refined sugar, 75 pesos per kg for washed sugar and 70 pesos per kg for brown sugar.

On the other hand, SRA factory site monitoring showed that the raw sugar composite price as of September 4 was P3,021.04 per 50kg bag (LKG), up nearly 7% compared to P2,824.18 per 50kg bag on 28 Aug.

As of September 4, the country’s total available sugar supply was 150,444 MT equivalent to 3,008,880 bags of LKG sugar, Alba said.

The SRA said earlier that local sugar production for the current crop year will increase by 5% to 1.88 million metric tonnes from the previous 1.79 million tonnes.

Despite the expected improvement in production, the SRA said it was still short of meeting the expected demand of 2.03 million metric tonnes for the period, which became the basis for allowing entry of 150,000 metric tons of imported sugar.

Meanwhile, the global sugar market is expected to show a surplus of 3.9 million tonnes in the new season starting in October, as good production in Asia and Brazil will offset problems in Europe and China, said the broker and analyst StoneX.

In its new report on global crops, the broker increased its view of the surplus by 3.3 million tonnes in July.

It predicts that India will have another near-record harvest in 2022/23 (October-September) at 36.5 million tonnes, 500,000 tonnes more than in 2021/22, as the weather has been favorable for the development of sugar cane fields.

The weather helped another big producer in Asia, Thailand. StoneX predicts Thai sugar production of 11.5 million tonnes in 2022/23, 14% higher than the previous season.

The analyst cut its estimate for the Europe plus UK region from 400,000 tonnes to 16 million tonnes as well as for China from 300,000 tonnes to 10 million tonnes, both due to drought in areas of production.

He expects Brazil to continue its recovery from the 2021 drought, with a potential production of 37.2 million tonnes in the country during the global cycle from October to September. —with Reuters

Rachel J. Bradford