IKAR in Mass and Industry Media

Russian sugar giants seen raising market share

Reuters

MOSCOW, April 27 (Reuters) - Russia's heavyweight sugar producers will grow their share of the country's output to at least half this year from 40-45 percent in 2005 by investing in beet processing plants, a leading analyst said on Thursday.

Dmitry Rylko, general director of Russia's Institute for Agricultural Market Studies (IKAR), said vertically integrated companies were also increasing the area sown to sugar beet as the sweetener trades near all-time contract highs in London.

"It's an era of reconstruction," Rylko said at an international sugar forum. "Sugar factories in 2006 have begun serious reconstruction work as investors see good prospects for the years ahead."

Sugar prices have soared in line with other commodities as top grower Brazil uses more cane in the biofuel ethanol, global stocks fall, demand rises and funds show increased appetite.

Russia, the world's largest importer of raw sugar, grows only about 45 percent of the sugar it consumes.

Rylko said the market share of vertically integrated companies -- those which produce sugar from their own beet -- rose to between 40 percent and 45 percent in 2005.

"This year it will be no less than half, maybe more. We observe growing acreage under these companies," he told Reuters on the sidelines of the forum.

Rylko said Russia would sow 870,000 to 890,000 hectares to sugar beet in 2006, a slight increase at the top end of IKAR's previous forecast of 870,000 to 880,000 hectares.

Last year, 806,000 hectares were sown to sugar beet in Russia, according to the Russian Sugar Producers' Union, the industry lobby.

Earlier on Thursday Andrei Chernyshev, chairman of the union, told Reuters Russia planned to refine 2.65 million to 2.70 million tonnes of white sugar from domestic beet this year from 2.50 million tonnes in 2005.

Russia's leading sugar companies, including Prodimex Holding, Rusagro Group and Razgulay , would retain the biggest share of the domestic industry, Rylko said, though foreign firms such as Sucden would also be involved.

Prodimex said last month it aimed to raise its share of the domestic market to as much as 25 percent in the next three to five years.

Rusagro's sugar division said it would invest up to $100 million in the next three years to boost output at four plants by at least 50 percent.

27.04.06

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