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IKAR in Mass Media

Hot summer boosts Russia sugar prices, imports slip

28 июня 2006 года

MOSCOW, June 21 (Reuters) - Russia will import slightly less raw sugar during this year's peak summer demand months as the world's biggest buyer shuns high global prices and grows more beet, industry officials said on Wednesday.

Imports are set to fall year-on-year in June, before rebounding in July as a domestic shortage prompts suppliers to raise prices on sugar used in home-made preserves, moonshine liquor and ice cream during Russia's warm summer.

"Imports always increase in the summer months, including now, but the volume will not be as big this year," Alexei Knyazev, general director of Rusagro-Sakhar, told Reuters.

"Imports have fallen because world prices have been very high," said Knyazev, whose company makes every eighth spoonful of sugar consumed in Russia.

World raw sugar prices hit a 25-year peak earlier this year as top grower Brazil used more cane to produce ethanol for fuel use and as stocks fell, demand rose and funds invested in the sweetener.

Yevgeny Ivanov, analyst at Russia's Institute for Agricultural Studies (IKAR), said raw sugar imports in June had so far reached 251,094 tonnes and another 240,000 tonnes could be expected by the end of the month.

In June 2005 Russia imported 636,600 tonnes.

This month's decline follows a near 50 percent year-on-year drop in May raw sugar imports, data from the institute showed.

MORE SUGAR BEET

Russia, which last year produced only 45 percent of the sugar it consumed, is increasing the area sown to sugar beet, a trend led by leading producers such as Rusagro, Prodimex Holding and Razgulay.

Some market sources said sugar beet this year would cover an area 20 percent greater than last year. IKAR has forecast a beet area of 870,000-890,000 hectares this year from 806,000 in 2005.

Russia's raw sugar demand is also ebbing gradually as the country imports more white sugar, part of it from Belarus, and overall sugar demand drops in line with a falling population and a growing fashion in big cities for artificial sweeteners.

But raw sugar imports are set to bounce back in July, traders and analysts said, as the sharp drop in May-June purchases has created a shortage when demand is still high.

IKAR's Ivanov forecast July 2006 raw sugar imports at more than 500,000 tonnes, compared with 473,620 a year ago.

Although sugar beet processing capacity has grown, it is unable to meet demand.

"In this period, you need 30 to 35 sugar plants to provide enough for all Russia's regions. We don't yet have that," a Moscow-based trader with an international company said.

"We expect a large increase in prices in the coming days. At the end of July, it will be the opposite -- the market will turn bearish," he said.

Importers are paying between $360 and $380 a tonne, CIF Russia port, for raw sugar, traders said.

IKAR said it now cost about $670 to produce a tonne of sugar and sales prices were currently $684 EXW Krasnodar.

By Robin Paxton

Source: Reuters  |  #sugar   |  Comments: 0   Views: 75

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