By Rene Pastor

The Philippines will not be able to fill up its sugar export quota to the United States in the 2012/13 season and changes are coming for the sugar industry when a Southeast Asian regional free trade area is implemented from 2015, a report by the U.S. agriculture attaché said.

The attaché report is compiled by agriculture experts of the U.S. embassy and is considered as authoritative by the commodity trade.

Among the changes for the Philippine sugar industry is that it will no longer be protected by a tariff wall when the free trade agreement under ASEAN goes into effect in 2015, the report explained.

Philippine government tariffs on raw and refined sugar imports are supposed to drop to 5 percent in 2015 from 38 percent in 2010.

“This reduction in AFTA (ASEAN Free Trade Area) tariffs is expected to significantly impact Philippine sugar production and trade as other ASEAN producers, particularly Thailand, enjoy lower production costs,” the attaché report concluded.

The very real danger for Philippine sugar producers is they could be displaced and even eliminated by their Thai rivals.

The Agriculture Department is trying to implement programs to consolidate farming operations, but the record so far has been mixed.

On another front, it looks like the sugar quota awarded the Philippines by the United States will go unfilled.

The Philippines has a sugar export quota to the U.S. of 144,901 metric tons, but the attaché report said the quota “will not likely be filled this year due to ample U.S. (sugar) supplies.”

The Philippines is normally the third biggest supplier of sugar under the U.S. import quota program.

The U.S. is a top market for Philippine sugar because prices of sugar in America would normally run around 35 to 45 U.S. cents a pound while prices of sugar in the world market fetch about 18 to 20 cents.

The attaché report said Philippine sugar exports in 2012/13 may hit 250,000 tons and the new export markets would be Japan, South Korea, Singapore, Canada, Samoa, Tonga and Malaysia.

By Rene Pastor

The Philippines, one of the world’s top importers of rice, has booked imports of 350,000 tons of the grain to head off any chance of a shortage during the third quarter of the year when supplies of its staple food normally run short.

The imports were forced in part by the fact that rice inventories in the Philippines dropped to a six-month low at the start of March. A large part of the country’s rice harvest comes in during the last quarter of the year.

The government of President Benigno Aquino III is taking aim at being self-sufficient in rice in 2013. But most analysts believe the Philippines will still need to import almost 1.0 million metric tons of rice because of rising consumption caused in part by the country’s expanding population which will soon top 100 million people.

The government’s National Food Authority said Vietnam won an April 3 tender to supply the 187,000 tons of rice, whose quality is partly determined by the proportion of broken grain in the shipment.

The deal had been announced by Vietnam’s Agriculture Ministry in mid-April and only confirmed by the Philippines on April 30.

The composition of the rice from Vietnam would be 10 percent long grain and 25 percent broken, the standard quality rice imported by the Vietnamese and the Thais. Higher grade, more expensive 5 percent broken rice, would fetch a premium of almost $100 over the 25 percent broken variety.

The NFA had also announced it would be importing 163,000 tons of rice from four countries as part of trade import commitments under the World Trade Organization. Of the planned rice imports, some 98,000 tons will come from Thailand, one of the world’s top rice exporters, with 25,000 tons each coming from China and India, and the remaining 15,000 tons from Australia, the Philippine government announced in early April.

Rice stocks in the Philippines as of March 1st, 2013 stood at 1.94 million metric tons, the lowest since Sept. 1, 2012, data from the Bureau of Agricultural Statistics showed. Since rice inventories reached 2.78 million tons on November 1st, the level of rice stocks has fallen over 30 percent, the government said.

Philippine rice production had suffered constraints over the years due to limited acreage and low yields.The Philippines planted about 4.66 million hectares to rice in 2012. Neighboring Vietnam plants over 7 million and Thailand sows more than 10 million hectares to rice.

The Philippine government is spending anywhere from 40 percent to 60 percent of the Agriculture Department budget on irrigation and infrastructure in mainly rice-growing areas.

By Jack Scoville, The Price Futures Group

Rice is showing a better market. Part of the rally here is due to the weather, but part of it is also due to the fact that U.S. cash markets are very tight and that supplies are minimal.

Brazil and the rest of South America are at harvest now and might be able to fill some demand that otherwise would come to the U.S. However, U.S. sales have held strong, so even if new demand does go south the tight situation here will not change.

Farmers in the U.S. Delta states are making slow progress in planting crops, and yield projections for the new crop should start to fall as a result.

Asian prices remain under pressure, with supplies on the increase in most exporter nations right now and demand not all that strong at all. Indonesia seems out of the market and Philippine demand has been minimal when compared to past years.

Asian prices should remain relatively cheap. But the Chinese planting season is just underway now and they have had some weather issues there as well. China and its demand will probably be the key for any significant Asian price strength in the near term.

Prices will probably stagnate near current levels unless some new demand is found.

By Aaron Cook, Metservice and Metraweather

There will be no shortage of rain to top up rice paddies across the Philippines this week.

Mindanao will be downright soggy. The seven-day rainfall chart below says it all, with the ECMWF deterministic model forecasting between 50 and 150mm (2 to 6 inches) of rain for most of Mindanao over the next week. This rainfall will be persistent, but not overwhelming, so there is little risk of significant flooding.

Eastern and Western Visayas will also pick up accumulations ranging from 25mm to 100mm (1 to 4 inches). Temperatures will be close to average across the country.

As we slide into next week keep an eye on the northern Philippines. The quasi-stationary front is threatening to advance southwards over Luzon, taking daily rainfall totals from a couple of millimetres per day to between 10mm and 25mm (0.4 to 1 inch). It’s not out of the ordinary for that quasi-stationary front to pay the occasional visit at this time of year.

Further afield, Vietnam, Thailand and Malaysia are heading towards average rainfall and temperatures for the week, while the sprawling Indonesian archipelago will generally see average to above average falls.

Finally, anyone with an interest in the Bay of Bengal should be paying attention to the increasing odds of a tropical cyclone next week. We could be in for some hefty daily rainfall totals and strong winds, but it will be another few days before computer models get a more convincing grip on the likely coastal impact zone.





By Jack Scoville, The Price Futures Group

Grains had a generally strong week, with some solid demand news on Thursday from USDA and generally poor growing conditions reported in much of the United States.

That could change some this week. Weather looks to get better in the Midwest and Great Plains, and we might finally start to see some real planting progress.

Very little work has been done in the northern Midwest and not a lot of work has been done in the southern sections, either, although there has been some progress made.

This week looks to be drier and warmer, with any threat of rain not showing in forecasts until at least the second half of the week. Both conditions are desirable right now.

Soils are just too wet in many places to get field work started, and soils are too cold for seeds to germinate in any case.

Warmer and drier weather early this week will give both wet and cold soil conditions a chance to improve. Corn, wheat, and soybeans are in weather markets, based on the cool and wet weather seen last week.

The market can move lower if the weather improves, but can continue to work higher if it does not. Hedgers should be ready to protect against either direction this week. Longer term, though, the U.S. will get a crop planted.

That implies that using rallies to sell futures or buy puts or something in combination is probably best for now.

By Jack Scoville, The Price Futures Group

Palm oil has been under pressure on less than needed demand and on weaker prices in competing vegetable oils.

Some weaker Chinese PMI data and some weaker data here in the U.S. put demand into doubt. Palm oil is used in China partly as feedstock for biofuels, and ideas of a weakening economy there hurt demand ideas from this important source. Food demand to India has been down in recent weeks as the country works down supplies it bought ahead of a tax increase there. But this demand will return in the near future.

It is China that bears watching, and right now the demand from China is in doubt. That will tend to keep prices under pressure.

However, weather in this part of the world, meaning North Americas, will have to be watched as this region supplies competition in the form of other vegetable oils. Plus, Argentine soybean oil exports are supposed to be slow this year due to economic problems in that country.

So, for now, prices might stay under pressure but the situation could change for the better if the weather in the U.S. and Canada does not get better.


July wheat futures ended the reporting week on Thursday, April 25, higher, as follows compared to last Thursday’s closes: Chicago 24.75 cents higher at 7.2850, Kansas City 29.25 cents higher at 7.9075 and Minneapolis wheat futures trended 17 cents higher at 8.2525.

Chicago July corn futures trended 37.50 cents higher at 6.62 while May soybean futures closed 17.50 cents higher at 14.41.

Forecasts of cold, wet weather in the Midwest on Monday moved corn futures to the limit of 40 cents higher.

Concerns over China’s bird flu, limited new export demand, good corn supplies in South America, a disappointing inspection-for-export figure for the week ending April 25 of 11.6 million bushels (mb), and spill-over pressure from lower gas and oil futures were factors that weighed on corn futures during the week.

Wheat futures were higher in reaction to spill-over support from the sharply higher corn futures on Monday; flooding in the Northern Plains, effecting spring wheat planting and a better-than-expected inspected-for-export figure of 30.9 mb.

On Friday and Wednesday, wheat futures were pressured by profit-taking and by lower outside markets.

Soybean futures moved higher with support early in the week from continued good exporter and processor demand of tight old crop supplies, a good inspected-for-export figure of 8.9 mb and higher corn and wheat markets.

Continued planting delays of US corn and thoughts that acres may change from corn to soybeans pressured soybean futures later in the week.


Cash wheat bids for May delivery ended the reporting week on Thursday, May 2, mixed compared to week ago bids for the same delivery period. Hard red winter wheat and dark northern spring wheat bids moved higher and soft white wheat bids were mixed.

Bids for US 1 Soft White Wheat delivered to Portland in unit trains or barges during May were mixed, from 1.50 cents lower to 5 cents per bushel higher compared to last Thursday’s noon bids for May delivery. Some exporters were not issuing bids for nearby delivery.

Bids for US 2 Yellow Corn truck delivered to the inland feeding areas of Yakima, Washington, and Hermiston, Oregon were 281.75-292.50, 9.00 to 15.75 per ton higher than last Thursday’s bids of 272.75-276.75. Higher Chicago July corn futures were supportive to corn bids.

Bids for US 2 Yellow Corn delivered to Portland in single rail cars were 286.50-288.50, 15.50 to 18.75 per ton higher than last Thursday’s bids of 267.75-273.00.

Bids for 11.5 percent protein US 1 Hard Red Winter Wheat for May delivery advanced by 29.25 cents per bushel compared to last Thursday’s noon bids for the May delivery in lining up with the higher Kansas City July wheat futures.

All exporters have switched their nearby basis to over the July Kansas City wheat futures. On Thursday, bids were as follows: May 9.1575-9.3075, mostly 9.2275; June 9.0075-9.2075; first half July 8.8075-9.1075, last half July 8.7075-8.9575; August New Crop 8.6550-8.8050 and September 8.7050-8.9050.

Bids for non-guaranteed 14.0 percent protein US 1 Dark Northern Spring Wheat for May Portland delivery trended seven to 17 cents per bushel higher compared with last week’s noon bids for May delivery.

Higher Minneapolis July wheat futures were supportive to the cash bids, although a lower basis bid by some exporters tempered advances.

Protein scales for non-guaranteed 14.0 percent protein were plus zero cents each 1/4 of a percent of protein up to 16 percent protein and minus four to five cents each 1/4 of a percent of protein down to 13 percent protein.

On Thursday, bids for non-guaranteed 14 percent protein were as follows: May 9.4025-9.5525, mostly 9.4825, June 9.3025-9.5025, July 9.2025-9.4525, August New Crop 9.1750-9.3750 and September 9.1750-9.2750.


There were six grain vessels in Columbia River ports on Thursday, May 2, with three docked compared to six last Thursday with two docked.

New confirmed export sales this week were limited to South Korea. South Korea purchased two cargos of U.S. wheat in metric tons for July shipment.

Cargo one includes: 2,400 of 8.5 percent protein soft white wheat, 13,800 of 9.5 percent protein soft white wheat, 4,800 of 11.5 percent protein hard red winter wheat and 4,000 of 14.5 percent protein dark northern spring wheat.

Cargo two includes: 9,500 of 9.5 percent protein soft white wheat, 2,500 of 11.5 percent protein hard red winter wheat and 11,900 of 14.5 percent protein dark northern spring wheat.

Outstanding U.S. white wheat export sales as of April 25, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 300.0 thousand MT compared to 409.0 thousand MT on April 18, 2012, and 610.3 thousand MT one year ago.

Outstanding white wheat export sales for the 2012-2013 marketing year were to the following countries in 1000 MT:
Japan 88.4
South Korea 51.2
Philippines 41.0
Thailand 16.9
Taiwan 10.4
Nigeria 8.7
Sri Lanka 2.0
Canada 1.7
Malaysia 1.0
Burma 0.5
Hong Kong 0.3
Vietnam 0.3
Total unknown 77.6.

Accumulated white wheat export shipments as of April 25, 2013, in 1000 MT for the 2012-2013 marketing year, totaled 4285.6 compared to 5151.3 one year ago.

Outstanding white wheat export sales for the 2013-2014 marketing year totaled 396.5 thousand MT and were to the following countries in 1,000 MT:
China 110.0
Philippines 85.5
Guatemala 59.8
South Korea 32.7
Thailand 30.5
Hong Kong 1.4
Burma 0.6
Total unknown 76.0

By Jack Scoville, The Price Futures Group

Coffee, sugar, and cocoa were seeing some divergent prices trends again last week, with cocoa prices stronger, coffee prices trying to be stronger, and sugar prices trying to work lower.

Cocoa seems driven by a slower flow of beans from West Africa right now. Demand has been no worse than anticipated, and in some areas it has been much better than anticipated.

Prices can probably work higher over the medium term. Coffee and sugar face the specter of big Brazil production.

Coffee prices are already cheap, and there are enough problems showing in other areas, most notably Central America and Vietnam, to keep prices stable for now no matter what the Brazil production happens to be.

The Brazil government is also about to announce a new support program for its coffee farmers and the announcement will probably help put a floor under prices.
Sugar is a market that everyone wants to be bearish on due to big Brazil production and big world stocks.

But it seems that even this story might be getting old. There does not seem to be a good fundamental reason to own sugar right now but everyone is bearish and many people are short, and that scares us. It could be that the market turns higher just to confuse and hurt the most amount of people that the market possibly can.

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: