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Monday, October 24, 2016

Sugar rush: Russia prepared to fill with sugar half of the world

The sugar market is reeling. Because of the vagaries of the weather (it rains in other countries, on the contrary, droughts and even frosts in Brazil and India are waiting for crop failure. These countries account for almost half of production. The stock price has soared since the beginning of the year more than 50%, reaching us $ 490 per ton, which is 4 years maximum. Market participants continue to bet on rise. For the second year in a row the demand for the product exceeds supply. It is possible that the stocks of sugar accumulated over previous years, can soon be used up. The question arises, will not affect whether the negative global trend on the Russian market, which will drive the price of this strategic product?

photo: pixabay.com

Senior analyst “Alpari” Roman Tkachuk stressed that currently the dynamics of sugar prices in the domestic market has nothing to do with the world situation. Russia for this product is self-sufficient, and it produces from cane and from sugar beet.

It is already easier. Do we have the harvest? According to the Ministry of agriculture has already been harvested 17.7 million tonnes of sugar beet, which is 500 thousand more than last year. And digging further, you have to handle more than half of the acreage. So the harvest promises to be excellent. And therefore a new question arises: what to do with the product of its processing? According to experts, the oversupply of sugar this year may reach about 100 thousand tons. In other words, the volume of Russian consumers simply do not eat.

The success of the sugar industry did not happen immediately. Konstantin Smirnov, who in 1994-1996 he headed the press service of the large sugar company, recalls that in Soviet times most of the fields and production was in Ukraine and in Latvia. After the collapse of the Soviet Union remained in power the country was able to meet the demand only by half. The way out is found through imports from Brazil and Cuba. Note that when the crops of sugar cane been stable, but prices were lower. Fuss in our market and transnational monopoly — SUCDEN with the headquarters in France. As ever instructive at the time was the history of Latvia. Under pressure from the EU it was forced to curtail its own production and to fully switch to imports. Because of this, the end of the 1990s, the sugar in Latvia has risen by half. Sugar imported needle could play havoc with our country. But not seduced. Was made a reasonable decision to access their own resources, namely our Earth, and to engage themselves in cultivation and processing of sugar beet. That led to a complete saturation of the market in our day.

Now Russian producers have a unique chance to step onto the world stage with their surplus. And raise ridiculous 6 export thousand tons per year up to more significant volumes. But not so simple.

As explained by Mr. Tkachuk, in recent years, our business has reluctantly been associated with the export because export duties and other difficulties with supplies of sugar abroad. If the state reset, then producers will be able dozens of times to increase exports of white sugar (now Russia’s share in the world market is only 3%). For example, it will happen. Then, it will take some more time for “recognition” Russian of the product. Because cane sugar is better than beet sugar. (However, there is another opinion: brown unrefined sugar contains more impurities than white. — “MK”.)

If Russian companies will be successful on foreign markets, the expert believes, in the long term they will have the choice to sell cheap sugar in Russia or expensive abroad. And they may prefer the second option, which will lead to an increase in domestic prices. But while this is only speculation, as is the regulatory policy of the state to control prices of this strategic product.

The consumer raises a logical concern. If all the excess is removed, then we ourselves are no reserves for a rainy day will not. We ought to save in the bins homeland a little bit, because the sugar is stored for a long time — as much as 4 years. And what happens with buckwheat. Export increased and eventually came to a shortage of cereals on the domestic market. As a result, she has risen more than 30%. Now a bit cheaper, but most likely to the December price tags will not return.

But the retail sugar prices dropped more noticeable. Though not as intense as in the wholesale segment, where for two months the price collapsed by a quarter. According to Rosstat, in one and a half months, sugar prices have fallen by 4.7%. Now in the capital’s shops is 900 g 39,9 rubles (with discount, of course).

Despite clear progress in the industry, can hardly be considered our sugar production so independent. The fact that the share of import of sugar beet seeds exceeds 90%. When we eliminate this gap and, that’s when we’ll celebrate a real victory.


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