IKAR in Mass and Industry Media

Russia sugar surplus seen cutting CIS import demand

Reuters

LONDON - Russia's expansion as a sugar producer is likely to generate a surplus of the sweetener in 2016/17 with exports expected to be targeted at markets such as Uzbekistan within the Commonwealth of Independent States (CIS).

The region remains well short of becoming a net sugar exporter because leading importers Uzbekistan and Kazakhstan will have requirements well in excess of the combined surpluses of Russia, Ukraine and Belarus, trade sources said.

"Because of the continuing expansion of Russian production, this should reduce the (CIS) region's import demand for sugar from the world market," said Sergey Gudoshnikov, a senior economist with the International Sugar Organization (ISO).

Russia's planted area to sugar is expected to rise to 1.1 million hectares in 2016/17, from 1 million a year earlier, spurred by strong domestic prices, Gudoshnikov said.

Russian sugar policy has encouraged moves towards self-sufficiency in recent years following the Soviet era's heavy reliance on imports from Cold War ally Cuba.

A decade ago, Russia was the world's top raw sugar importer. In recent years the country has emerged as a modest net importer, buying supplies largely from Brazil.

However, trade sources say Russia could have an exportable surplus of around 200,000 metric tons in 2016/17 (Oct/Sept).

Trade sources said Russia's freight advantage meant it could compete in the CIS region with supplies shipped from Brazil, the world's top exporter.

"Sugar supply (to markets) inside the CIS is possible, but there is no economic rationality to export it to countries outside the CIS," said Andrey Bodin, the head of Russia's Sugar Producers' Union.

CIS sugar imports were expected to fall by 17 percent year-on-year to 1.6 million metric tons of raw sugar and 355,000 metric tons of white sugar in 2016, according to Russia's Sugar Producers' Union.

Ukraine's sugar production also looks set to increase with analyst Green Pool forecasting it would rise to 1.6 million metric tons in 2016/17 from 1.46 million a year earlier.

Ukrainian sugar producers estimated that the country's surplus in 2015/16 was around 400,000 metric tons with modest tonnages exported to Romania, Kazakhstan and Moldova between September and January.

The potential for shipments to the European Union has been curbed, however, by the size of its export quota.

Andriy Dykun, the head of Ukraine's sugar producers' union (Ukrsugar), said this month that Ukraine's duty free export quota to the EU should be increased to 300,000 metric tons from 20,000 metric tons now.

30.03.16

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