Excessive Sugar production in the Philippines needs to export thousand tons

Philippines may export 200,000T sugar on top of US quota

·        35,892 tons raw sugar for prompt shipment to Japan & Indonesia

·        US quota allocation for the Philippines raised by 18,892 tons

·        Says 2010-11 raw sugar output seen highest in 3 years

The Philippines says it can export up to 200,000 tons of raw sugar this year on top of its US quota commitments, but it may not have a lasting impact on global prices as the shipments will only partly offset expected crop losses in Brazil.

The Southeast Asian country would start selling raw sugar this month to Japan and Indonesia, with committed shipments of 35,892 tonnes, Rosemarie Gumera, manager at the policy and planning unit of the state agency Sugar Regulatory Administration (SRA), told Reuters.

The exports will be the Philippines’ first to markets other than the United States since the 2007-2008 crop year, made possible by an expected three-year high in domestic output.

The initial reaction was to dampen strong Asian prices, with premiums for J-spec, or low-quality Thai raws for the Japanese market, dropping to 180 points above New York futures from 500 points last week after the Philippines began selling its sweetener, dealers said.

But the Philippines’ exports alone may not have much of a global impact, as the market is worried about the magnitude of output decline in Brazil, the world’s No.1 sugar producer.

“(The volume) certainly is not to be sneezed at — a couple of hundred thousand tonnes — but it’s not, in my view, going to be something that will fundamentally change the course of the market,” said Luke Mathews, a commodity strategist with Commonwealth Bank of Australia in Sydney.

“It’s likely to be dwarfed by the production and export losses that are being experienced in Brazil.”

In the physical market, premiums for the widely-traded high polarisation, or hipol Thai raw sugar, were steady at 250 points above New York futures, also suggesting that some sellers were not too concerned about sales from the Phillipines.

The international sugar market is awaiting a forecast on centre-south output from Brazilian cane industry group Unica, due for release on Wednesday and looks certain to be cut from the previous estimate in March.

For the Philippines, sugar exports will also prevent domestic prices from further declining, easing the pain of local producers still reeling from the dramatic drop in prices from record highs hit in late 2010.

“A total of 35,892 tonnes are ready for shipment and the destinations are Japan and Indonesia. That’s already a commitment,” Gumera said. “But most probably we can sell as much as 200,000 tonnes this year.”

Indonesia is Southeast Asia’s largest sugar consumer.

On Tuesday, the Philippine government announced the country’s quota allocation to the US in the current crop year ending August was raised by 18,824 tonnes to 212,509 tonnes, the second increase in the quota this year.

“Certainly the announcement by the Philippines of more than 35,000 tonnes of exports does signal that the market is at levels which are attractive for sellers,” Mathews said.

Bumper harvest: The Philippines’ sugar output in 2010-11 (Sept-Aug) has outpaced annual demand of 2.2 million tonnes, with production at 2.36 million tonnes as of June 26, SRA data showed.

“We estimate total output this crop year to reach 2.4 million tonnes,” said Archimedes Amarra, executive director of the Philippine Sugar Millers Association and SRA board director.

That would be the highest since crop year 2007-08 when the Philippines’ output reached 2.455 million tonnes.

Amarra said producers wanted deals with other potential buyers such as China — the world’s third-largest sugar consumer — Malaysia, and South Korea, and big buyers outside Asia.

SRA officials said there was a chance the Philippines may sell sugar to countries in the Middle East. The Philippines had in the past exported sugar to the United Arab Emirates.

Amarra said it was “a little difficult to find a market” for Philippine sugar these days given the huge supplies available from major exporters.

“We are competing with Thailand which has a bumper harvest and is aggressive in marketing,” Amarra said.

Thailand, the world’s second-biggest exporter after Brazil, has a record 9.62 million tonnes of sugar in the current 2010-11 crop, of which around 7.0 million tonnes were expected to be available for export in 2011, also a record high.

Brazil is expected to add new sugar milling capacity slowly, in part due to high costs, signalling tightness in the sugar market in the medium term, a senior Rabobank analyst said.

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China's first Varyag Aircraft carrier is ready for War this July in South China Sea

China is Ready for War

China could begin testing its first aircraft carrier within this second – to 3^rd week of July 2011 and is developing more advanced satellites, reports said on 12^th July, adding to concerns about its expanding military clout amid disputes over the resource-rich South China Sea & West Philippines’ Sea (WPS) in Spratlys.

Beijing has ramped up defense spending over the past few years, replacing outdated equipment and unveiling a slew of cutting-edge technologies, including a prototype stealth fighter and powerful ballistic missiles.

Its first aircraft carrier, a retrofitted ship bought from Ukraine in 1998, is expected to be mainly used for training purposes, a state-run newspaper reported, but others are believed to be in the works.

It has been news that the Varyag is supposed to be launched July 1 to control over the Spratlys in the West Philippines’ Sea (WPS) by whistle blower that leaked the news from intelligence report of Japan and Korea make the sense that neighboring countries noising to call the attention of the US and it is also the reason of their recent activity in the Spratlys as a preparation for the whole take over to the western Philippines’ waters but postpone over the Philippines-US Joint Naval Exercise called CARAT recently in the Sulu Sea.

The former Soviet carrier Varyag, once destined to become a floating casino, is now part of President Hu Jintao's push to modernize the navy.

Chinese military and political sources have said Beijing could launch the carrier this year, as China marks 90 years since the founding of the ruling Communist Party. Such a launch would be a first, exploratory step towards an operational carrier fleet.

"The ... Varyag is expected to serve primarily as a training vessel for pilots and deck crews," the English-language China Daily reported.

It "will begin initial sea trials probably either late this month, in early August or later in the year," the official newspaper added. "It is uncertain when the Varyag will be made operational and where it will be based."

The paper also reported there were "rumors" that another aircraft carrier is being built in Shanghai, but it did not elaborate.

Chen Bingde, chief of the People's Liberation Army General Staff, told the United States top military chief Admiral Mike Mullen who is visiting China that the Varyag was a "very valuable for us to research these things", the China Daily said.

Analysts say that, in practical terms, it will probably take the Chinese navy years to possess a credible carrier operation in Asia's seas, which have largely been the domain of the U.S. navy since World War II (WWII).

The cost of building a medium-sized conventionally powered, 60,000-tonne carrier similar to the Russian Kuznetsov class could exceed $2 billion. China is likely to acquire at least two, sources say.

China’s Military Modernization

The carrier will add to regional concerns about China's military modernization and arms build-up.

In recent weeks, China has been flexing its muscles more aggressively in the South China Sea, where a territorial dispute with the Philippines, Vietnam and several Southeast Asian nations, including Malaysia and Brunei, has festered for years.

China is also working on a ballistic missile that could pose a serious threat to U.S. aircraft carriers, which Washington could deploy to seas around Taiwan in the event of a crisis with the self-ruled island, which China claims as its own territory.

"The missile is still undergoing experimental testing and will be used as a defensive weapon when it is successfully developed, not an offensive one," Chen was quoted as saying.

Use of such missiles would leverage China's growing prowess in developing more advanced satellites, according to a report in October's Journal of Strategic Studies, a copy of which was obtained by the Reuters.

These reconnaissance satellites would enable China to track hostile forces in real time and guide ballistic missiles, enabling Beijing to project power far beyond its shores.

"China's constellation of satellites is transitioning from the limited ability to collect general strategic information, into a new era in which it will be able to support tactical operations as they happen," the report said.

"China may already be able to match the United States' ability to image a known, stationary target and will likely surpass it in the flurry of launches planned for the next two years."

Foreign Ministry spokesman Hong Lei reiterated China's stance that they are opposed to the militarization of space.

"We believe that space should only be used for peaceful purposes, and to benefit all of mankind," he told a regular news briefing.

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