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Sugar demand from Russia is expected to pick up

03 марта 2005 года

MOSCOW, March 3 (Reuters)- Sugar demand from Russia, the world's biggest raw-sugar importer, is expected to pick up substantially in the second quarter of 2005 after a lengthy lull, trade sources said on Thursday.

They said Russian buyers were poised to re-emerge in force as a big slice of the last beet-sugar crop is believed to have been used up, and a chunk of stocks has also been consumed.

The present rising trend in domestic Russian prices, which suggests tighter domestic supplies, will boost the financial incentive to import cheap sugar from prime origins, especially Brazil, much of it for prompt shipment, they said.

"I expect Russians to buy close to a third of their import needs in the second quarter of 2005. Some Russians have started buying already, but not in huge amounts," a trade source said.

"Traders see demand and not enough supply."
Andrey Chernyshev, head of the Russian Sugar Producers Union, also predicted an acceleration of Russian sugar buying.

"Today the prices are approaching levels which permit us to buy more raw sugar," Chernyshev told his group's annual meeting on Thursday, held on the sidelines of the Moscow International Sugar Forum, a trade show and conference.

Traders said they expected Russia's domestic sugar prices to rise modestly in the coming months before the start of the next harvest from September.

They quoted Russian white sugar ex-refinery in the benchmark Krasnodar region in southern Russia, near the Black Sea, at $515.0-530.0 a tonne, up from around $490.0 a month ago.

Several trade sources said Russian buyers would return to the market in force in the coming weeks as the domestic campaign was over, and sugar stocks have been drawn down heavily.

They said Russian buying on the international market had been quiet for the past several months due to the domestic beet sugar campaign, which wrapped up in January.

Analyst Yevgeny Ivanov with the independent Institute for Agricultural Market Studies estimated that sugar stocks in Russia as of the end of January 2005 were 1.8 million tonnes, down from 2.1 million at the same date last year.

Another trade source estimated Russian sugar stocks had fallen by one million tonnes between September 2003 and October 2004, and said imports could rise by 400,000 tonnes to 3.2 million tonnes in the September 2004 to October 2005 crop year, compared with the previous year.

Brazil, the world's top sugar producer, is expected to be the main beneficiary of the upturn in Russian raw-sugar buying, compounded by the difficulties of Cuba, another leading supplier, which is facing its worst drought in many years.

Traders were reluctant to project the impact of Russian physical buying on sugar futures, as they said the market may already have built-in expectations, and the action of funds, believed to have boosted cash flows to soft commodity markets, was hard to predict.

But they noted that strong Indian buying in recent months after successive drought-hit crops in the world's biggest consuming nation, had added upward pressure to sugar futures.

Traders said they expected no changes to Russian sugar policy in the coming months and the import duty structure to remain unchanged.

They said they expected Russia's raw-sugar import duty, which is reviewed monthly and is linked to the price of NYBOT raw sugar futures, to stay steady at $164 a tonne when the duty level for April is announced within the next two weeks.

Source: Reuters  |  #sugar   |  Comments: 7   Views: 96

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