Philippines sugar output seen improving 5%

MANILA, Philippines — The country’s raw sugar production is expected to marginally improve in the next crop year despite the effects of the El Niño phenomenon, the United States Department of Agriculture (USDA) said.

In the latest report of the USDA Foreign Agricultural Service (FAS), the Philippines is seen to produce 2.2 million metric tons of raw sugar, five percent higher than the expected 2.1 million MT in the current crop year.

The USDA has revised its projection from an earlier flat growth for the industry.

A sugar crop year starts in September and will end in August the following year.

“Raw sugar production is forecast to recover although current dry conditions caused by El Niño, particularly during the planting stage, may affect sugarcane production,” USDA said.

“Sugar producers also remain cautious about the impact of the deregulation of the sugar industry being studied by the government,” it added.

Sugar consumption, likewise, is forecast to increase to 2.3 million MT following a flat 2018 as sugar sweetened beverage consumption slowed due to higher taxes.

Domestic food processing and beverage sectors, nevertheless, continue to expand, while consumers adjust to the increased sugar taxes.

This crop year, demand is placed at 2.25 million MT as imported sugar fills in the decline in local production and a drop in high fructose corn syrup imports.

Almost all sugar produced in the Philippines is consumed locally where roughly 50 percent of domestic consumption is accounted for by industrial users, 32 percent by households, and the remaining 18 percent by institutions.

Raw sugar imports are forecast to hit 200,000 MT while exports of “A” sugar to the US market are estimated to reach 120,000 MT or 20,000 MT less than what the US allocated for the Philippines.

This as sugarcane production area dropped slightly to 415,000 hectares from 418,000 hectares the previous year.

Cane production is also expected to decline to 23 million MT due to poor weather conditions and smaller planting area reported.

The largest Philippine sugar export market is the US, as prices under the US tariff rate quota system are normally higher than world market prices but lower than domestic prices.