- The Philippines hasn’t exported very much sugar this year.
- This is because domestic prices are high.
- It’s normally a reliable exporter of raw sugar to the USA.
Poor Sugar Production…Again
- The Philippines should produce 2.1m tonnes of sugar this season, down 45k tonnes year-on-year.
- The country’s cane crop suffered a prolonged period of wet weather, meaning cane development suffered.
- With consumption at around 2.4m tonnes, it’ll be unable to satisfy domestic demand for the seventh season running.
The Philippines Takes Action
- It’s not unusual for the Philippines to be in deficit, but this year, the Government’s acting.
- It’s decided to not ship its full US Tariff Rate Quota volume so that domestic stocks remain at a sufficient level.
- We reckon out of the allocated 142k tonnes, the Philippines may fulfil 100k tonnes.
- Its exports to the US have been scrutinised since 2014/15 as it has consistently failed to satisfy domestic demand.
- Action is being taken this season, however, as it’s no longer attractive for the Philippines to export like it has been previously.
- With the firm domestic prices, the producers would rather sell 100% of their crop to the domestic market.
Will the Philippines’ Exports to the US Stop Completely?
- In previous years, traders and producers have received duty-free import licenses if they exported to the US.
- This allowed them to cheaply replace any exported sugar and offset the incurred losses.
- We think this dynamic will remain the same in 2021, but we’re yet to hear whether the SRA will release import licenses.
- If it does, we could see the Philippines import some sugar in the second half of the year.
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