April 13, 2014

SRA warns about rising sugar prices

News portal interaksyon.comquoted the Sugar Regulatory Authority (SRA) as saying sugar prices have been rising as the country reels from delays in production in the aftermath of the supertyphoon last November. Mill gate prices for sugar allocated for the domestic market have risen by 3.36%% while those allocated for the US and other export markets have risen by 1.28% and 1.68%, respectively.

To address the issue, the SRA has increased the allocation for the domestic market (taking out a portion from the allocation to non-US market) thus there should be no reason for the price hikes. The SRA also warned that it is willing to employ regulatory measures to curb any speculation.

Our take: This is worth watching as runaway sugar prices can significantly affect earnings of food and beverage companies like San Miguel Corp (SMC), Pepsi Cola Products Phils (PIP), RFM Corp (RFM), LT Group (LTG), Emperador Inc (EMP) and Ginebra San Miguel Inc (GSM). Universal Robina Corp (URC) should be least affected as its sugar milling operations produce adequate supply for its internal requirements and to sell to the market.– WealthSec