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Russia sugar imports off to slow start, pickup seen

02 марта 2006 года

MOSCOW/LONDON, Feb 7 (Reuters) - Raw sugar imports to Russia, the world's biggest buyer, are off to a slow start due to high prices, adequate stocks and a good harvest, but may rise in the second quarter, traders and analysts said on Tuesday.

Russia, a big grower of sugar beet, usually imports raw cane sugar in the first half of the year ahead of peak summer demand for jams, confectionery, ice creams and beverages.

"Prospects don't look very bright. International prices can move more rapidly than domestic prices, and buyers are extremely careful," said Yevgeni Ivanov, an analyst with Moscow's independent Institute for Agricultural Market Studies (IKAR).

"They are wary of buying now, as prices may go down when they start selling (to refineries) in April."

Traders said Russians had bought raw sugar this year, but at a subdued pace because of a good domestic beet harvest, high international prices and comfortable stocks.

Ivanov estimated that refined sugar stocks in Russia were 1.95 million tonnes at the end of January, up from 1.73 million a year ago.

One trader estimated Russian buyers this week would import sugar at $13-18 per tonne below the break-even level.

"It is not wildly out from a profitable level. If raw sugar futures fall by 50 points (0.50 cent a lb), you would be getting quite close (to profitability)," one trader said.

Traders estimated the cost to a Russian buyer of importing raw cane sugar, paying duty and refining it at $740-745 per tonne, and quoted Moscow refined sugar ex-refinery at around $727 per tonne.

Domestic sugar prices in Russia have surged by some 50 percent in the past six weeks as they tracked the international market higher.

Raw sugar prices have surged to 25-year highs this year, driven by supply tightness, rising demand, growing use of Brazilian cane to make biofuel, and a strong appetite by investment funds seeking high returns.

The New York Board of Trade's key March raw sugar contract tumbled 0.50 cent or 2.5 percent to conclude at 18.80 cents a lb on Monday.

Russia said on Tuesday it would keep its raw cane sugar import tariff at $140 per tonne in March, unchanged from the previous five months.

Traders said the duty was likely to remain steady in the near term.

"The raw sugar futures market would have to fall dramatically to have a higher level of duty," one trader said.

Under the Russian tariff calculation scheme the rate is set each month. The rate is pegged to the average New York futures price for the three preceding months.

Traders said the flow of raw sugar imports to Russia could pick up in the coming weeks as it would be a dangerous tactic to let stocks fall too far.

They said Cuban new crop sugar supplies were expected to start departing for Black Sea ports later this month.

IKAR estimates annual sugar consumption in Russia at 5.80-5.85 million tonnes.

It expects imports of raw sugar to be no higher than 2.7 million tonnes this year, down from some three million tonnes in 2005, and output of sugar from domestic beets to be 2.5-2.75 million tonnes.

In 2005, Russia refined around 3 million tonnes from imported raws and 2.5 million from domestic beets.

Source: Reuters  |  #sugar   |  Comments: 0   Views: 76

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