‘PH sugar prices still uncompetitive’
Credit to Author: Eireene Jairee Gomez| Date: Fri, 13 Dec 2019 17:52:20 +0000
THE country’s sugar prices will “remain uncompetitive” in 2020, as these are nearly “twice as high as” those in the global market, while consumption of the staple is expected to keep rising, according to a Fitch Group unit.
In a report released on Friday, Fitch Solutions said “Philippine sugar prices will remain uncompetitive by global standards.”
“Despite our forecast for global sugar prices to average slightly higher in 2020 at $13.5 per pound, Philippine prices are almost twice as high,” it noted.
According to Fitch Solutions, the country was trading sugar at around P1,500 per 50-kilo bag in recent months. For 2020, international sugar prices would be around P760 per 50-kilo bag.
“The rise in global sugar prices is, therefore, not going to make the Philippines any more or less price-competitive. With sugar imports from Thailand rising, however, it is likely that cheaper imports will cap domestic prices to an extent,” it said.
“But note that the SRA will continue to allocate sugar for domestic use and for exports, regardless of prices,” it added, referring to the Sugar Regulatory Administration.
Fitch Solutions also trimmed its production forecast for local sugar to 2.1 million metric tons (MMT) from the previous 2.2 MMT, noting that total output would remain flat year-on-year.
It also lowered the country’s long-term sugar production growth rate for 2021, 2022 and 2023 to 2.152, 2.223 and 2.330 MMT, respectively.
“While unfavorable weather in recent months will lower yields and overall production in the short term, gradually decreasing sugar area due to prolonged labour shortages and rising competition from cheaper imported sugar will weigh on the industry in the longer term,” Fitch Solutions said.
Local consumption of the sweetener may also continue to increase steadily, driven by industrial users amid higher taxes on substitute good high-fructose corn syrup.
Sugar consumption is forecast to reach 2.297 MMT in 2021, 2.343 MMT in 2022 and 2.378 MMT in 2023.
“That said, the Philippines is still close to self-sufficient in sugar, with almost all of domestic output being consumed locally,” Fitch Solutions said.
Based on the SRA’s Sugar Order 5, about 95 percent of the country’s total sugar production shall be allotted to local industries, primarily industrial users and beverage manufacturers, while the rest shall be exported to the US sugar market.