Some local traders recently locked contracts to buy sugar in Thailand, an industry executive privy to the negotiations told Reuters.

"I have confirmed they (traders) have made positions," said the executive, who declined to be identified.

Traders in Bangkok said early this week that the Philippines had entered the Thai sugar market and bought between 26,000 and 28,000 tonnes of white sugar for June delivery.

The Philippines needs to import 200,000 tonnes of sugar this year because of increased demand from the local beverage industry and prospects of a domestic shortfall in the next crop year due to dry weather, officials and industry executives said.

"If importations have indeed resumed, we are entering the international sugar market again (for the first time) since the 1995/1996 crop season," a source atthe Sugar Regulatory Administration (SRA) said.

Heavy imports of cheaper sugar in 1995/1996 ending August 31 resulted in a glut, pushing down domestic raw sugar prices to a low of 480 pesos per 50 kg bag in late 1996 from 800 to 900 pesos at the start of that year.

Prices have since recovered to 790 to 805 pesos through a government-supported buying programme. The government also banned the import of sugar, resulting in the mopping up of excess supplies.

"We started the new crop (1997/1998) with a carryover stock of 311,000 tonnes but all of it has been consumed," the SRA source said.

"If the imports will not come in July then there we will be a shortage," the source said.

Local sugar buyers are awaiting the approval of the government to import sugar at a 50 per cent tariff instead of the usual 65 per cent.

Philippine raw sugar output in the current crop year is forecast to drop slightly to 1.815 million tonnes from an actual 1.828 million the previous year, the industry executive said.

Butdemand is expected to rise to 1.95 million tonnes from the previous 1.85 to 1.9 million because of rising demand from the beverage sector. The local beverage sector, which consumes around 450,000 tonnes of refined sugar yearly, reported a 35 per cent increase in sales by value in the first quarter.

The dry weather and the run-up to the May 11 presidential election, when candidates distributed food and drinks, stimulated the increase in beverage consumption, the executive said.

The Philippines is likely to import more sugar in the next crop year despite rains in the main sugar producing province of Negros in recent days, the SRA source said. "The standing crop has not been properly cared for," the official said, adding the dry spell since April 1997 stunted the growth of the sugar crop planted between October and February.