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Fewer Russians have sweet tooth for sugar imports

23 февраля 2005 года

By Aleksandras Budrys and David Brough

MOSCOW/LONDON, Feb 23 (Reuters) - Russia, the world's top raw sugar importer, could buy less sugar in 2005 than last year because of a falling population, a bigger domestic crop, dwindling stocks and changing lifestyles, Russian analysts said.

Russian consumption this year may fall to 5.8 million tonnes this year from 5.95 million in 2004, said Yevgeni Ivanov of the Institute for Agricultural Market Studies (IKAR) in Moscow.

"The main reasons for falling consumption are declining population, a drop in per capita consumption, and a fall in moonshine liquor use," Ivanov told Reuters.

Russia has been in the grip of a demographic crisis since before the fall of the Soviet Union, as economic collapse cut the birth rate and rampant smoking, drinking and growing levels of disease have pushed up mortality.

Russia's population will fall by a third by the middle of this century, when the world's biggest country will have 100 million people -- less than Egypt, Vietnam or Uganda, Russia's Security Council said last month.

Sugar industry analysts were divided over whether Russian import demand would drop in 2005.

London-based sugar merchant Czarnikow said stocks had been drawn down in Russia during 2004 and that import demand was set to recover by around 400,000 tonnes during 2005, even taking into account the growth in domestic beet sugar production.

"The situation is clouded because sugar is flowing into Russia from neighbouring states, which is making it difficult to estimate demand," Toby Cohen, Czarnikow's director of research, told Reuters, referring to illegal and legal imports.

Czarnikow said in its February report: "Given a contracting population and high prices, actual Russian sugar demand is falling which suggests that, over the medium term, Russia is likely to play a much reduced role in global sugar demand."

The London-based International Sugar Organization (ISO) is pessimistic about the Russian import demand outlook.

"Not much encouraging news on the import side is expected from the world's leading importer of sugar, Russia," the ISO, which tracks demand and supply, said in its January report.

"Among several factors behind the subdued import demand from Russia is the larger sugar production from domestic beets."

Ivanov predicted that Russia's sugar refining from domestic beets could rise to 2.62 million tonnes this season from 2.27 million refined from last year's crop.

He saw Russian raw sugar imports at 2.3 million tonnes for 2005, down from 2.51 million in 2004.

ISO senior economist Sergey Gudoshnikov said surging Russian demand three or four years ago had shored up inventories which are now being consumed, dragging on import requirements.

"Import prices were so low when compared to domestic prices that people bought lots of sugar," he said.

Anecdotal evidence suggests rising incomes in Russia are changing lifestyles with people drinking less illegal vodka and making less home-made jam, and eating more nutritious foods, analysts said.

Gudoshnikov said rising domestic sugar prices could be pushing down sugar consumption in Russia.

"The Russian sugar consumer is price-sensitive," he said.
Currently Russian domestic prices are around $530 a tonne in Moscow, up from around $512 at the end of 2004.

Gudoshnikov said the possibility of a cut in the Russian sugar import duty, which is reviewed regularly and is inversely tied to raw sugar futures, was neutral for raw sugar demand as a lower duty accompanied a higher sugar price, and vice versa.
The duty currently stands at $164 per tonne. www.reuters.com

Source: Reuters  |  #sugar   |  Comments: 0   Views: 92

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