The sugar market shows atypical behavior

Wholesale prices for sugar fell last week. This is atypical behavior for the market, given the rather good demand on the stock exchange, last week 1.5 - 2.0 thousand tons of sugar were sold during the session. Such volumes of exchange trading were previously a sign of an active market and a reason for rising prices. It can be assumed that in this way, large companies, after rising prices, signal to the regulatory authorities about their “social responsibility”, and the secondary market, seeing a decrease in prices, is in no hurry to buy volumes for future use, purchasing sugar only in the amount of current demand. To this must be added the continuing problems with railway shipments, a sharp rise in the cost of road transport, and a decrease in the quality of the sugar offered. If our assumption is correct, then today we have an accumulating pent-up demand, which at some point will enter the market.

According to Sugar.ru price monitoring data, for the period from July 13, 2023 to July 20, 2023, the dollar exchange rate rose by 0.6% (on July 13 - 90.63 rubles / $, on July 20 - 91.20 rubles / $). The ruble Moscow wholesale price for sugar decreased by 1.80 rubles/kg (-2.61%), the Krasnodar wholesale price decreased by 1.50 rubles/kg (-2.33%). The Moscow dollar wholesale price for sugar decreased by $0.024/kg (-3.15%), the Krasnodar wholesale price decreased by $0.021/kg (-2.95%).

High prices for raw sugar and a low exchange rate of the ruble rule out the import of raw sugar in the Russian Federation in the medium term, not counting the 20,000 tons nominated for the Raevsky sugar factory.

In Kazakhstan, sugar factories are forced to empty warehouses before the new season, the price of sugar fell to 365 tenge / kg (74.4 rubles / kg at the current exchange rate), at this price, the production of sugar from raw sugar becomes unprofitable.

The weather in sugar beet regions does not promise a record harvest, our estimate of sugar production for the next season is rather leaning towards 6.1 million tons (including sugar from sugar beet molasses)

According to preliminary data, sugar beet harvesting in the Krasnodar Territory will begin on July 27, but usually, two days before the planned date, the harvesting start date is specified taking into account the state of the beets and weather conditions. If everything goes according to plan, the launch of the first sugar factories in the Kuban is expected by August 1.

According to the Federal Customs Service, processed by Sugar.Ru, the export of molasses pulp (TN VED 23099091) continues. In June, 32.5 thousand tons were exported, in just 11 months of the season - 771.3 thousand tons. The main recipient of molasses pulp is still the Netherlands, according to the results of 11 months, Latvia almost caught up with them. Export of ordinary pulp (TN VED 230320) in June amounted to 48 thousand tons, for 11 months of the season - 564.3 thousand tons. In total, since the beginning of the season, Russia has exported only 1,335.6 thousand tons of pulp. For comparison, for 11 months of the last season, 1491.4 thousand tons of pulp were exported.

The estimated cost of white sugar from raw sugar is $825.82/ton (75.32 rubles/kg).

As of July 20, 2023, the cost of sugar from imported raw sugar in Uzbekistan is $838.9/t (67.85 rubles/kg in Krasnodar, including delivery) excluding VAT and duties, in Kazakhstan - $771.6/t (66.45 rubles/kg in Krasnodar, including delivery) excluding VAT and duties.

According to Sugar.Ru railway monitoring, 3.2 thousand tons of Belarusian sugar were imported to the Russian Federation over the 19 days of July. This is significantly lower than the rates of previous months (for the whole of June - 16.0 thousand tons, for May - 11.4 thousand tons). Export rates also slowed down, since the beginning of July, 12.8 thousand tons of white sugar have been exported (30.9 thousand tons for the whole of June, 33.5 thousand tons for May). The export of white sugar goes mainly to Kazakhstan, and supplies to other countries of Central Asia, including Uzbekistan, also continue. Railway transit through the Russian railway since the beginning of the month amounted to 3.2 thousand tons of Belarusian sugar.

The transit of raw sugar from the beginning of July amounted to 33.1 thousand tons from Riga and St. Petersburg, shipments go to the addresses of sugar factories in Kazakhstan and Uzbekistan.