- The Philippines won’t export any sugar to the US in 2022.
- This hasn’t happened since the 2015/16 season.
- The Philippines usually exports around 136k tonnes of sugar to the US each year.
The Philippines Faces its Eighth Consecutive Production Deficit
- Once again, we don’t think the Philippines will ship its full 136k tonne raw sugar quota to the US next year.
- This is because it’s set to produce 2.1m tonnes of sugar, down 38k tonnes year-on-year.
- Production is falling because, in recent years, more of the country’s cane farmers have turned to plant corn, in search of greater returns.
- With this, the country’s cane area is not growing, and sugar production is falling.
- So, if our consumption estimate of 2.53m tonnes holds true, the Philippines will not have enough sugar to satisfy domestic demand for the eighth season running.
- All the sugar it produces should therefore be used to satisfy domestic demand to keep imports as low as possible; this hasn’t happened since 2015/16.
- Nevertheless, it’ll still need to import around 100k tonnes in H2’22 to ensure stocks and domestic prices are healthy prior to the 2021/22 crush.
How Has the Market Responded?
- The Philippines’ sugar producers and farmers are happy with the Government’s decision, as they haven’t been keen on the US Tariff Rate Quota for the last few years.
- This is because they sometimes have to sell sugar destined for the US at a large discount to the domestic market via the A Quedan.
- The traders, however, can import cheap sugar from the world market and sell it to domestic buyers at a higher price (via the B Quedan).
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