Sugar price monitoring in Russia and news from Kazakhstan and Ukraine, Aug 31, 2017

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The inspection of the material and technical base of sugar factories was carried out in Bashkortostan. Raevsksahar plans to process about 500 000 MT of sugar beets in the current season, Chishminsky - 470 thousand tons, Meleuzovsky - 415 thousand tons.


According to the Ministry of Agriculture, by August 30, 2017, sugar beet in the country was harvested from the area of 97.7 thousand hectares or 8.1% of the area sown (in 2016 - 83.1 thousand hectares). Beet harvesting began in Karachaevo-Cherkessia.


Consumer prices for sugar in Russia decreased by 1.5% from August 22 to August 28, 2017, and from the beginning of the year (by the end of December 2016) - by 3%, according to Rosstat.


According to price monitoring data for the period August 24-31, 2017, the US dollar rate dropped by -0.7% (on August 24 - 59.13 rubles/$; on of August 31 - 58.73 rubles/$). The ruble Moscow wholesale price for sugar increased by RUR 0.50/kg (+ 1.75%), the Krasnodar wholesale price went down by RUR 0.30/kg (-1.12%). US dollar wholesale Moscow sugar price increased by $ 0.012/kg (2.49%), the wholesale Krasnodar price decreased by $ 0.002/kg (-0.44%).

Wholesale prices for sugar, earlier falling from the first half of July, have seemingly stopped. For a whole week, the officially announced prices in the Krasnodar region are at least 26.5 rubles per kilo, and in the central part - not lower than 25.5 rubles per kilo. There are reports of sales at the level of 25 rubles per kilogram, but they are single deals and limited in quantity. The demand continues to be low, and stubborn are both: buyers who are waiting for 25 rubles per kilo or less, and sellers who are reluctant to further reduce the price.

In a view of the news about good harvest of sugar beet, the Russian market faced the question, what to do with so much surplus of sugar? A few years ago this question was raised only accompanied by a strongly ironic grin, but the reality proved bolder than any breath taking plans. The first obvious solution is to increase the export of sugar, and at current low prices we already see growing exports. If in July Russia exported 9.6 thousand tons of white sugar by rail, in August it was 12,000 tons already. The first this month sugar railcars left for Azerbaijan carrying 670 tons from Uspensky sugar plant (Prodimex) on August 31. In the best months of last year (March-April) the "white" export of sugar from Russia was under 50 thousand tons, but at that time the price of sugar at the London stock exchange was $460/ton, while now it’s $380/ton (or RUR 22/kg without VAT). Taking into account the delivery of "London" sugar to consumers and the discount on Russian sugar, it is possible to estimate the export parity for deliveries to Azerbaijan at the balance price of RUR 24/kg, and today a number of Russian companies offer sugar at such prices for export. In Kazakhstan the cost of raw sugar (excluding taxes and duties) is about $ 500/ton today, that means the Russian sugar becomes competitive at a price of $ 440/ton (or RUR 25.7/kg),.

If we consider the export of sugar by sea, the cost should be much lower. Firstly, Russian sugar will be taken only at a discount of $20-30/MT to current stock exchange values, because domestic sugar does not meet international standards, in particular what concerns packing bags and 45 ICUMSA colour. Secondly, Russia lacks the developed logistics of export supplies, and for delivering sugar in containers to the ship to Novorossiysk seaport the seller will have to pay from $40/ton (for Krasnodar sugar) to $90/ton (for supplies from the central part of Russia), that means that the provisional economically reasonable price for exports from Krasnodar should be no higher than $320/MT or RUR 19/kg.; and for the central part of Russia – as low as RUR 16 /kg; moreover, if we consider the cost of transportation by sea, the prices should be even lower.

As much as four conclusions can be made from the written above. First, you need to maximize the supply of sugar to the neighbouring countries, but, given the political situation in a number of countries, such exports can be performed only with the support of the leadership of the Russian Federation. Second, we should try to stop the supply of raw sugar to Belarus and Kazakhstan. Over the past season Kazakhstan has received 227,000 tons of raw sugar, this season - already 94,000 tons, taking into account vessels arriving. Belarus has received 146,000 tons last season. The expected production of the EAEC countries in the current season is about 7,300 thousand tons, the estimated consumption is 6,900 thousand tons, thus, stopping such raw cane sugar imports to the Union can solve the surplus problem in the coming years. Third, we need to prepare ourselves for what Ukraine is already doing, bringing the quality of sugar to the stock exchange standards, as at such rates of production we will have to face sugar exports by sea. Well, the fourth conclusion is that, with such procurement prices for beet (which is calculated basis price of sugar), we should expect a decrease in crops next year, we believe, no less than by 10%.


The prosecutor's office submitted to the court a case accusing of the theft of sugar from the Agrarian Fund's warehouses in the Cherkassy region for the amount of UAH 211.65 million. According to the investigation, sugar was stolen from July 2015 to February 2016. The deputy prosecutor of the Kyiv region Alexander Kolesnik, the accused, was detained.


The Gnidava sugar plant (Volyn region) has started the juice extracting season, this year the enterprise plans to process about 500 thousand tons of beets, the regional administration reports.


Out of total acreage of 9 548.2 hectares sown with sugar beet, the plants remained on an area of 6,810 hectares, according to the Ministry of Agriculture. Beet reception by the Merken sugar factory is scheduled for September 25 and by the Tarazsky sugar factory - for October 5.



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