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IKAR in Mass Media

Russia opens way for higher June sugar import duty

20 мая 2010 года

MOSCOW, April 23 (Reuters) - Russia has effectively cleared the way to quadruple its raw sugar import tariff in June, giving extra incentive to bring up to 1.2 million tonnes flooding into port when the duty sinks to an unusually low $50 a tonne in May.

The Commission of the Customs Union of Russia, Belarus and Kazakhstan agreed on Friday to peg the duty to New York prices in the preceding month, rather than the preceding three months, in a move the trade says could raise the June duty to $200.

The decision takes effect immediately and means suppliers to the world's No. 3 raw sugar buyer have until the end of May to take advantage of next month's exceptionally low tariff of $50 per tonne, down from $140 at present.

Analysts and traders said monthly raw sugar import volumes in May could approach or even surpass an eight-year record.

"The raw sugar volumes imported in May will be enough to supply the market until the start of beet sugar production at the beginning of August," Andrei Bodin, chairman of the Russian Sugar Producers' Union, told Reuters.

Benchmark ICE raw sugar futures slid almost 40 percent in the first quarter of this year, as the market focused on a lack of physical demand after prices surged to a 29-year peak of 30.40 cents a lb on Feb. 1.

Prices fell by almost half in the following weeks, before the relief rally kicked in. Russian demand has contributed to a rebound in prices from an 11-month low, meaning a comparison to April prices will result in a higher duty.

"The June tariff will be significantly higher than in the previous month -- about $200," said Dmitry Rylko, general director of the Moscow-based Institute for Agricultural Market Studies (IKAR).

Rylko said more than 200,000 tonnes of sugar delivered in March and April was still waiting in warehouses to be cleared by customs. This could add to the approximately 1 million tonnes that IKAR expects to arrive at Russian ports in May.

F.O. Licht sugar analyst Stefan Uhlenbrock also expects a surge in imports during May, followed by a sharp slowdown during June and July.

"The country has not imported more than 1.2 million tonnes of sugar in a single month in the recent past, and that was already back in June 2002," Uhlenbrock said.

"With reports that there is already sugar lying in ports and just waiting to be cleared through customs when the duty comes down in May, actual shipments may possibly come close to that."

RUSH TO CLEAR CUSTOMS

The Customs Union, formed on Jan. 1, 2010, agreed to apply an import tariff in the range of $140-$270 per tonne from Jan. 1 to April 30 and again from Aug. 1 to Dec. 31. Uncertainty has surrounded the tariff rates from May to July.

According to the new policy, the June tariff will be set by May 15 based on the average New York sugar price for April. Under the previous scheme, it would have been set based on the average price for February, March and April.

The previous method led some analysts to forecast a June tariff of around $85 a tonne, still well below the $140 a tonne level for April.

"Everyone will try to clear customs with the $50 tariff," said a senior Russian sugar trader, who declined to be named.

"Theoretically 1 million tonnes is possible, but that doesn't mean 1 million tonnes will be unloaded in May. They will stand in line, pay demurrage costs and perhaps have to unload in June," the trader said.

"There will be hardly any imports in June, July or August; only those small quantities from suppliers who could not unload in May."

Russian sugar imports were 377,223 tonnes between Jan. 1 and April 8, 2010, a more than fourfold increase from the 91,368 tonnes imported in the same period a year ago. The import tariff was cut to $140 per tonne from $165 from Jan. 1.

Bodin, head of the producers' union, said he expected Russia to import about 1.1 milliontonnes of raw sugar in May -- nearly three quarters of the 1.5 million tonnes it forecasts for the entire year. Bodin also forecast that Russia would produce a record 3.9 million tonnes of beet sugar this year, provided current weather conditions persist, due to a higher sowing area and better yields. The revised import tariff policy will help, he said.

"The new mechanism will create a level playing field for sugar produced from beet and raws," said Bodin. "It will allow a quicker reaction to world prices."

Source: Reuters  |  #sugar   |  Comments: 0   Views: 58

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