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Record Russian Sugar Stocks to Maintain Exports as Output Slumps

24 августа 2020 года

(Bloomberg) -- While the outlook for this season’s Russian sugar crop may be worsening, the nation’s burgeoning stockpiles will likely help to maintain shipments near last year’s record levels.

Last season’s soaring output, and lower consumption due to the coronavirus pandemic, mean that inventories in the 2019-20 season are expected to rise to the highest in more than two decades, according to supply-chain services firm Czarnikow Group. These high stockpiles could help Russia to keep white sugar exports at about 1.3 million tons in 2020-21 -- a similar level to the previous season, it said.

Russia’s sugar output has doubled over the past decade, which transformed the country from a huge importer to having excess supply to offload. Russia sends most of its exports to regional markets but other buyers in the season which just ended have included Kazakhstan, Uzbekistan, Turkey, Greece, South Africa, Israel and Madagascar. While shipments from Russia are unlikely to have a big impact on global sugar prices, they will help to keep the regional market well supplied.

The positive outlook for Russian sugar exports comes after weaker production outlooks domestically as well as in Thailand and the European Union. This drop in global output outlook, along with stronger-than-expected demand from China, has also helped prices rally, by about 17% from a July low in New York, despite rising output in top shipper Brazil.

“Stocks have been rising consistently for the past 20 years,” said Ben Seed, an analyst at Czarnikow Group. “Last season’s crop was so large that even with the disappointing crop coming up there’s still plenty of room for exports to continue.”

A slump in domestic prices, amid ample output that stretched the nation’s storage capacity to the limit, helped Russia export a record of at least 1.4 million tons of white sugar last season, government data show.

However, production in the 2020-21 season is expected to fall to a five-year low of 5.5 million tons because of dry weather and lower acreage, Czarnikow estimates.

“Domestic prices went up recently, but they still make exports possible,” said Evgeny Ivanov, an analyst at IKAR. “Shipments were very active in July and August.”

Source: Bloomberg  |  #sugar   |  Comments: 0   Views: 88

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