IKAR.ru - main page
for Agricultural
Market Studies
Электронная почта:

Забыли пароль? | Зарегистрироваться


2018 CIS Sugar Conference

22 марта 2018 года

Last week, the sugar industry gathered in Moscow to attend the 7th CIS sugar market conference co-organized by the International Sugar Organization (ISO) and the Eurasian Sugar Association. We will share the main discussions and topics debated at this event in this week’s editorial.

A record crop and exports in Russia

A representative from the Russian Ministry of Agriculture highlighted the fact that, last year, farmers reached a record crop not only in sugar beet production, but also for other crops and grains. The estimate for sugar production in calendar year 2017 was of 6.3 million mt, an increase of 6.9% on the year, and when looking back to 2000, sugar production has quadrupled since then. This surge in white sugar output is now sufficient to meet internal demand and to significantly increase export volumes. Data from Ikar show that sugar production in the 2017/18 campaign in Russia has reached 6.457 million mt as of March 19.

The ISO presented the main trends for this year’s world sugar market, with expectations of a surplus of about 5 million mt, due to increasing production mainly in India, the EU and China, which caused a decline in the world price. For next season, another surplus is expected but should be below the level of this year. The main question mark for 2018/19 is the amount of sugar that Brazil will produce, since this will also depend on ethanol output.

The first panel discussed export perspectives in CIS, taking into account that the region has positively evolved recently in terms of volumes but also efficiency and yields. The Eurasian Sugar Association started by highlighting that this season’s sugar production in the CIS markets were above expectations. A year ago, their preliminary forecast for the 2017/18 campaign was of minor growth of about 1% on the year to 9.090 million mt. In fact, sugar production in CIS grew by nearly 7% on the year, or more than 500,000 mt to 9.628 million mt.

Multiple factors explained this growth, starting with the fact that seeding areas grew by 7%, which was more than expected, coupled with favorable weather conditions that boosted both beet and sugar yields. This means that the CIS region is now self-sufficient in sugar, considering annual sugar consumption of about 9.3 million mt, therefore imports are no longer needed and the surplus can be exported. Former projections had suggested that CIS markets wouldn’t be self-sufficient before 2020.

Last year, CIS countries exported a total of 568,000 mt of sugar outside the block, with Ukraine having the lion’s share as it accounted for 496,000 mt, while Russia sold only 21,000 mt. The big difference between the two countries is due to a lack of infrastructure for Russian sugar exports in the Baltic and Black sea. On the other hand, Russia is the leader in terms of exports within the CIS block, with 520,000 mt, followed by Belarus with 400,000 mt. Last year, intra-trade within CIS countries totaled 1.120 million mt.

The bumper crop in Russia also impacted its domestic prices, which have followed the downward trend seen in world markets. A similar situation occurred in other CIS markets such as Ukraine or Kazakhstan, as their domestic prices remain dependent on Russian and world markets. On the other hand, prices in Belarus or Moldova haven?t fluctuated so much, as those markets benefit from governmental support in setting indicative prices.

Looking to the next campaign, the Eurasian Sugar Association expects a year- on-year reduction of 4% in sugar beet seeding areas in CIS, as low sugar prices could push farmers to look at other crops such as wheat. This will push sugar production down to 9.190 million mt, with the bigger drops coming from Russia, down by 350,000 mt to 6.2 million mt, and Ukraine, which should produce 2.000 million mt, a decline of 140,000 mt on the year. As a result, stocks at the end of the year should decline to 930,000 mt, down from 1.623 million mt, and a stabilization of domestic prices is expected. Despite this decline in production, CIS markets will remain net exporters in the 2018/19 season.

Logistics and export challenges

The following panel discussed logistics and export infrastructure challenges in the CIS region, as well as on a global scale. The bumper crop seen in Russia but also in other countries has changed the traditional pattern of sugar trade in the region, as those countries now have a sugar surplus and are currently net exporters. This new situation is forcing export companies in the region to adopt international standards and new trading schemes that are export oriented. When there is a sugar surplus, the arbitrage between world and domestic prices becomes an essential aspect, especially in a time of low prices, as is the case now. Exporting this surplus can become a challenge when world prices are below domestic ones, as is the case in most producing regions, or below the cost of production. Production costs in Russia have been estimated at about $410/mt, while in Ukraine they have been assessed at about $350/mt. As a reference, the London 5 May contract was assessed at $353.80/mt on Wednesday, March 21. An additional question that has been raised for CIS exporters is the quality of their sugar, as GOST standards are different from world ones. Finally, exports must also comply with international standards in terms of packaging, bags weight or printed marking.

Exporting this sugar surplus is a challenge for CIS countries, considering they are distant from the EU or the Americas. However, taking into account that the main sugar producing countries lack warehouse capacity, exporting the surplus is seen as the only option. Investment in warehouse capacity is needed in the near future, considering the situation of a surplus market might continue.

However, one of the biggest challenges for CIS countries in order to play a major role in the world market is the logistics issues. Ports in Russia are not sufficiently equipped for transportation of containers, too remote from the main sugar factories or might freeze in the winter like the St Petersburg port. The remoteness of the factories from ports not only increases logistics costs but also delays shipments.

This makes logistics costs in Russia much more expensive when compared with a country such as Ukraine, where those costs can be three times lower.


The general feeling at the end of the conference was that CIS countries will remain in a production surplus — with Russia continuing to be the top beet producer in the world — and therefore net exporters of sugar in the short to medium term. This structural change has had a major impact in global trade flows, considering that Russia used to be a major raw importer until the 2015/16 season. However, multiple challenges and investments such as mentioned above need to be carried out in order to make CIS countries once again major players in the global sugar trade flow, albeit this time as exporters.

Organizational partner of the conference - IKAR.


Source: platts.com  |  #sugar #CIS-Sugar-Conference   |  Comments: 0   Views: 389

There are no comments yet. Be the first!

Only authorized users can comment.

About IKAR

Our news
Our services

Feedstuffs & Ingredients

IKAR in Mass Media

Market review
Market studies
Market prices
Graphically speaking
Information materials

Exhibitions & Events
Work in agriculture

Site Map

IKAR. Institute for Agricultural Market Studies © 2002—2023   IKAR. Institute for Agricultural Market Studies
24, Ryazansky str., off. 604, Moscow, Russia
Tel: +7 (495) 232-9007
Facebook RSS

Language: Russian   Google translate: Google translate: Russian Google translate: German Google translate: French Google translate: Italian Google translate: Portuguese Google translate: Spanish Google translate: Turkish Google translate: Lithuanian Google translate: Chinese Google translate: Korea

Old site