According to Sugar.ru price monitoring for the period from May 18, 2017 to May 25, 2017, the US dollar rate dropped by 0.8% (the rate was on May 18 - 56.74 RUR/$; on May 25 - 57.27 RUR/$). The ruble Moscow wholesale price for sugar increased by 0.40 RUR/kg (+1.17%), the Krasnodar wholesale price increased as well, by 0.90 RUR/kg (+ 2.80%). US dollar wholesale Moscow sugar price rose by $0.012/kg (+1.99%), the wholesale Krasnodar price increased by $0.020/kg (+3.53%).
The sugar rises, under the dictation of the "Prodimex", continue to grow. On Thursday, May 25, "Prodimex" went "all-in" by raising the price immediately by 0.4 RUR/kg, the rest of the market amicably pulled to this level. Against this background, there was an increase in demand, apparently the regions were tired of waiting for possibility of lower price and began to buy sugar.
The situation, when sugar prices are rising, despite a significant official surplus, requires any explanation. Companies on this account, as usual, have different opinions diametrically opposed. One view is the wrong assessment of the sugar stocks in Russia, which, allegedly, isn't so much. This is explained by the "attributions" of production (we reject such a conspiracy version), and by significant increase in demand and exports of Russian sugar. The second version is that there are a lot of sugar, and that the owners of these surpluses have iron nerves and a clear strategy on how to sell this sugar expensive.
Consumption in Russia has certainly increased, although it is difficult to give exact estimates. It is clear that with a deterioration in the standard of living, and in the regions there are people who receive salaries below 15, and even 10 thousand RUR per month, there should be a shift in consumption to cheaper sources of energy, and sugar is now one of the cheapest sources of calories.
According to the rail cargo monitoring data by Sugar.Ru, exports of sugar continue to stay lower than the level of recent months, mostly at the expense of Azerbaijan and deliveries via the port of Novorossiysk. In Azerbaijan by rail was delivered 22.7 thousand tons of white sugar in April, but during 25 days of May - only 9 thousand tons. Deliveries to the port of Novorossiysk to the station Novorossiysk (exp.), amounted to 4 thousand tons in April, and for 25 days of May - 1.8 thousand tons. Since the beginning of the year at this station was delivered 9.3 thousand tons by sugar plants from the Liski, Yelan -Kolenovsk and Uspensk (all belongs to "Prodimex"), which can be considered as a lower bound of Russian sugar exports by sea.
It is also difficult to assess "gray" exports to Kazakhstan and Belarus, and only approximate assessments can be made about that. We do not know about the supply of Russian sugar to Belarusian processing companies, however, for the population needs sugar is exported. According to approximately estimates, it can reach 1,000 tons per month, but the presence of Russian sugar on the shelves of Belarus creates the impression that the country is "inundated with Russian sugar." "Gray" Kazakh sugar can also be estimated only approximately. So the Chelyabinsk region, the main supplier of such sugar to Kazakhstan, in the 2015/16 marketing year (until April) received 155.7 thousand tons of white sugar by rail, and for the same period of the current MY it was 205.8 thousand tons (+ 50 thousand tons). Some of this sugar went were stocked and other part went to Kazakhstan. We do not have exact data, but according to an survey of the experts trading in the region, we estimate the total Kazakh "gray" exports in the current MY at the end of May in about 50-100 thousand tons, rather the lower value.
Thus, the second scenario is more likely, when the companies artificially hold sugar to not crash the price in the market. And this means that we will see an increase in supply before the new season, and we can only guess how the market will react to this.
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