Price monitoring data by Sugar.ru and sugar exports/imports data from Ukraine for 5 months of 2017, Jun 08, 2017

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RUSSIA

From May 30 to June 5, 2017, consumer sugar prices rose by 0.2%, and from the beginning of the year (by the end of December 2016) - fell by 9.4%, according to Rosstat.

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"And he will possess the treasures of gold and silver and various jewels of Egypt;
The Libyans and the Ethiopians will follow him"

Dan.11: 13

According to Sugar.ru price monitoring data, for the period from June 1, 2017 to June 8, 2017, the dollar rate fell by -0.2% (as of 01.06 - 56.69 RUR / $, on 08.06 - 56.59 RUR / $). The ruble Moscow wholesale price for sugar increased by RUR 3.70 / kg (+ 10.48%), the Krasnodar wholesale price increased by RUR 3.00 / kg (+ 8.57%). Dollar wholesale Moscow sugar price increased by $ 0.066 / kg (+ 10.59%), the wholesale Krasnodar price increased by $ 0.055 / kg (+ 8.91%).

Today we could literally repeat our previous review of the leading and guiding role of "Prodimex", except for the price level, of course, which, in the week of June 1-8 increased by 3 RUR / kg in Krasnodar, and by 2 RUR / kg in the central part of Russia.

The strategy of Prodimex, and other companies with sugar stocks, seems perfectly clear. Companies that have sufficient reserves to fully trade before the new season, and there are few, can afford not to dump commodity at growing market. With a significant increase in prices, buyers will not store "expensive" sugar for future use, allowing a pullback after a sharp increase, but are forced to regularly buy sugar under current obligations to counterparties and to find the market. Such a strategy can work before the beginning of a new season, the timing of which is questionable, given the cold spring and early summer, and the delay in the receipt of sugar from a new crop for at least 2 weeks is an additional 200,000 tons of the old harvest.

Summing up the results of Russian sugar exports, we need to figure the railroad shipments from the previous survey, i.e. 265,000 tons for 10 months of the month, add another 5,000 tons of sugar shipped from Krasnodar region to Armenia by trucks. The analysis of rail shipments of sugar for the 8 days of June, shows that, despite rising prices and the strengthening of the ruble, the export of Russian sugar continues at the level of 30,000 tons per month, due to the shortage of sugar in these countries. While Kazakhstan and Azerbaijan would not complete processing of fresh raws, the exports to these countries will continue.

Estimating the consumption of sugar in the Russian Federation at 5.65-5.7 million, and the production volume at 6.2 million tons in current season, we see 500-550 thousand tons of surpluses, of which at least 300 thousand will go to "white" exports, and about 100 000 tons will become "gray" supplies to Kazakhstan, Donetsk and Lugansk regions of Ukraine. The remaining superfluous 100-150 thousand tons may as well be consumed by the population as a result of a change in the food line and the transition to cheaper products. Even if not so, for sugar holders, there is a direct reason to take these residues right to the new season, enjoying the cream from the end of the current season rather than sell the remaining sugar close to the cost price.

Summarizing the all above. For a significant drop in prices the two conditions are necessary: 1) a company with significant volumes that are large enough to detour the market, and 2) the motives for such company to discharge significant amounts of sugar. So far we do not see these conditions come together.

UKRAINE

According to the State Fiscal Service of Ukraine, in the 5 months (January-May) of 2017, the export of sugar (the HS code 1701) amounted to 387,973 tons in the amount of $ 190,474,000. The main importers of Ukrainian sugar, in money terms, are Sri Lanka (10.70%), Libya (10%) and Côte d'Ivoire (8.5%).

Export and import of Ukraine for 5 months of 2017

Sugar.Ru