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[07.10.2005] EXPERTS BELIEVE USDA FORECAST ON RAW SUGAR IMPORTS TO RUSSIA IS TOO HIGH


Russian sugar market experts believe a recent forecast by the U.S. Department of Agriculture (USDA) on imports of raw sugar to Russia for this season is too high.
U.S. specialists from the USDA have forecast that Russia will import 4.2 million tonnes of raw sugar in the next 12 months, up 200,000 tonnes from the September forecast. They also said that sugar consumption in Russia amounts to 6.45 million tonnes per year.
"These are unrealistic figures which do not reflect the situation on the Russian sugar market at all," Yevgeny Ivanov, a leading analyst at the Agrarian Market Affairs Institute (IKAR), told Interfax.
Ivanov forecast that raw sugar imports would fluctuate between 2.8-3.5 million tonnes in the next few years depending on sugar production from Russian sugar beets. "The limit would be 3.6 million tonnes," he said.
Beet sugar production in Russia will amount to 2.4 million tonnes, Ivanov said. In 2004, Russia produced 2.25 million tonnes of beet sugar and imported another 2.6 million tonnes.
"In addition, neighboring CIS countries also deliver large amounts of white sugar to Russia," he said.
Ivanov said the scale used to determine duties on raw sugar imports to Russia ends at 9 cents per pound. "But the exchange price is already higher than 11 cents, its highest level for the last five years, and there's no guarantee that it won't hit 12 cents," Ivanov said, adding that "the stir on the oil market is reflected on the sugar market as well."
"However, since this growth won't be compensated by lower duties, I don't think that a single trader will transfer raw materials under these conditions," he said. The cost of sugar processed from raw materials imported under such conditions exceeds $570 per tonne against $530 from previous years, he said.
raw sugar business is not as advantageous as it used to be as production costs for a tonne of raw sugar are $70 more than the costs for producing beet sugar. Experts from the Razgulyai company said the difference in cost is $100.
U.S. experts' forecast that 6.45 million tonnes of sugar will be consumed in Russia in 2005 is also too high, Ivanov said.
"A forecast of 3.5 million tonnes of imported raw sugar and consumption of
5.7 million tonnes is closer to reality," Deputy Chairman of the Russian
Sugar Producer's Union Sergei Mironov said.
"There is no sense in importing raw sugar in conditions where prices sugar prices in the country have dropped lower than the cost of raw sugar," he said. Thus, it is unlikely that 4.2 million tonnes of raw sugar will be imported to Russia, Mironov said.
Agro-Info analyst Yelena Muntyan also believes the U.S. forecast was too high.
"These are unrealistic figures as the last 2-3 years have shown that the Russian market does not consume more than 3 million tonnes of raw sugar," she said. "Growth in imports could ruin the market and I don't think it would be advantageous for Russian operators to increase imports," Muntyan said.
"Perhaps, this forecast was made taking into account Russia's possible entry into the WTO, which would result in certain reductions for access to foreign markets," she said, adding that this "has been strongly lobbied for in talks with the WTO on agriculture and not only with Russia but with other countries as well." "But reality shows that such large imports will not take place," she said.
Commenting on the U.S. forecast, Muntyan said that "five million tonnes is a little too high." "Talking about more than 6 million tonnes would mean provoking Russia into increasing its volume of imports," she said. "This is being done intentionally in order to justify the forecast for an increase in imports," she said.

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