IKAR in Mass and Industry Media

SUGAR PRICES IN RUSSIA TO CONTINUE TO DROP - EXPERTS

Interfax

The drop in sugar prices in Russia that began two weeks ago will continue in the foreseeable future, experts on the sugar market said.

"Further drops in prices can be expected over the next few weeks," Yevgeny Ivanov, a leading analyst at the Agrarian Market Affairs Institute (IKAR), told Interfax.

Between September 19-30, wholesale producer prices dropped 1.6% to $495 per tonne from $503.2 per tonnes and this will continue due to a number of factors, Ivanov said. Sugar plants will begin actively offering beet sugar in October-November, he said. Beet sugar production may increase to 2.4 million tonnes in 2005 from 2.25 million tonnes in 2004, particularly in the Central Black Earth, Volga and Urals regions.

In addition, the situation on the Russian sugar market will depend on deliveries of white sugar from CIS countries, mainly from Belarus. Ivanov said white sugar imports from Belarus would amount to at least 600,000 tonnes between October 2005 and March 2006 and "the first 1,000 tonnes have already been imported to Russia.

Deliveries of white sugar from Belarus are not subject to customs duties and this often leads to raw sugar being imported to Russia under the guise of beet sugar even though raw sugar imports are subject to a duty of $340 per tonnes, he said. The Russian Economic Development and Trade Ministry is currently investigating the situation with white sugar imports from Belarus.

At the same time, Ivanov believes there are factors that could lead to an increase in prices on the sugar market. In particular, a seasonal rise in sugar consumption from the confectionery industry that usually happens at the end of the year and growth in world quotations on sugar could push sugar prices up. However, he said the increase in prices would not begin until November and "possibly in February 2006."

"Today, there is a surplus of sugar on the market and this is reflected by prices," Deputy Chairman of the Russian Sugar Producer's Union Sergei Mironov said.

Wholesale prices will likely stabilize at $490 per tonnes, which is not advantageous for sugar beet producers or sugar companies, he said. Prices will not grow in the near future since subsidized sugar will continue to be imported from Belarus and the large presence of raw sugar will remain. Mironov said that deliveries of Belarussian sugar this season may total about 700,000 tonnes.

Beet sugar production in Russia in 2005 will amount to 2.2 million tonnes or about the same as last year, he said. Raw sugar imports will rise to 3.5 million tonnes against 2.6 million tonnes in 2004, he said.

07.10.05

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