[Reuters]

Published date: 20th Nov 1987

20 November 1987

Reuters News

English

(c) 1987 Reuters Limited

MANILA, Nov 20 – The Philippines will borrow between 30,000 and 100,000 tonnes of raw sugar from Thailand to meet a sudden increase in demand after a shortfall caused by a severe drought, a government official said.

Sugar Regulatory Administration (SRA) chairman Arsenio Yulo told Reuters the transaction, called a time swap, Involved the repayment of the sugar with sugar within six to twelve months. Thailand was the closest available supplier.

Traders handling the deal would receive a fee probably amounting to about 10 pct of the transactions involved.

“This is a temporary measure due to the lack of supply,” Yulo said. “We have to do this as soon as possible.”

The country’s 38 sugar mills did not have sufficient supplies and only 11 mills were operating.

Yule said the SRA would not reduce its projected output of 1.6 million tonnes for the 1987/88 crop year ending August. It set 1986/87 output at a provisional 1.34 million tonnes.

“By January we expect all the mills to be in full swing,” he said, Milling usually starts in the first week of October.

SRA figures show only 34,293 tonnes have been milled so far this year, far lower than 64,574 tonnes in 1986.

Yulo said refined sugar stocks total 108,053 tonnes, less than one month’s demand, which had risen steadily this year, reaching 143,000 tonnes in August from 102,000 tonnes a year earlier.

The shortage had caused domestic sugar prices to rise sharply to a currently level between 420 and 450 pesos per picul (60 kg), up from 190 pesos in August 1986.

“What we want to prevent is an increase of sugar prices from 450 pesos per picul because of the supply Shortfall,” Yulo said.

Yulo added the United States also was likely to Increase its calendar 1988 Import quota from the Philippines by 110,000 short tons of raw sugar from 143,780 tons this year. The 1987 quota was slashed from 248,028.

Department of Agriculture figures show the Philippines exported 136,220 tonnes of sugar worth 49.06 million dollars between January and August this year, down from 165,960 tonnes worth 64.23 million dollars a year earlier.

It said world import demand is forecast to decline by five pct to 24.8 million tonnes in 1987 because of limited imports by the United States and India.