MANILA, Philippines - The Sugar Regulatory Administration (SRA) has cleared the conversion of a total 90,000 metric tons (MT) sugar intended for the world market sugar to domestic use.
Through Sugar Order No. 11 issued on June 5, the SRA said the total volume of verified “D†sugar quedans as of May 31 was placed at 106, 053 MT but only 90,000 MT would be cleared for conversion to keep domestic prices stable.
“There is a need for the SRA to determine the quantity of “D†world market sugar in order to attain the balance required for a stable and viable market environment,†the SRA said in the order.
The SRA will using the conversion coefficient of 0.4346 to determine the respective volume for the conversion rights for planters and millers.
The order takes effect immediately.
Last month, the SRA allowed the reclassification of unshipped world market sugar to domestic market sugar to stabilize local supply and bring down prices which has been rising steadily until January.
Sugar producers – planters and millers – were asked to submit their “D†quedans for verification by May 31 to qualify for conversion.
The conversion rights may be traded, but must be used by July 1 or would be declared invalid.
After the reclassification, the total buffer stock 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 the SRA would not intervene in the negotiation process between the sugar producers and sugar traders.
At the time of the issuance of the conversion order, the domestic millsite and wholesale prices 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 his year is expected to exceed the production target this year 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.