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"Fever" of the sugar market (ММЦ "Moscow")

"Fever" of the sugar market

Situation in the world market

The last some years the world market of sugar is characterized by inconsistency of a supply and demand. The offer of sugar - syrtsa considerably exceeded demand, overproduction results in falling the world prices, growth of stocks. According to English company " Czarnikow ", the difference between manufacture and consumption in 99/2000 year has made about(near) 6,7 mln.t. And world reserves have made approximately half of import. Stocks of sugar - syrtsa also became the stabilizer of position in the world market this year. In the world market such countries, as Brazil, Cuba, India, Pakistan, Mexico, Tajland and Australia are considered as the basic manufacturers. But, adverse weather conditions and poor harvests of a sugar cane this year have resulted in the opposite disbalansu: demand has exceeded the offer. And if not stocks of sugar for the last year, deficiency and the appropriate rise in prices on sugar - syrets could arise. However rise of the prices all the same is observed.

F'juchersy on sugar - syrets on the New York stock exchange October have grown in the price for 10-18 cents for pound. Partly this growth was provoked by the Russian traders. But the reason of it not only actions of the Russian participants of a stock exchange though Russia also is the largest importer of sugar and influences the world market. To this growth the market is obliged to action of hearing about discrepancy of a supply and demand this year and to expectation skochka the prices. Participants of a stock exchange predict increase of the market up to 12 $ for pound.

Situation in the Russian market

In 1999 as a whole on Russia the increase of the area of crops of sugar beet, growth of total gathering and volumes of manufacture of domestic sugar was observed. Including the volume of manufacture of sugar from import raw material has considerably grown, this was promoted by favorable conditions in the world market. The situation of this year has cardinally changed in comparison with the last year's period. Weather conditions have detained gathering sugar beet for one month. On the end of September 33 factories on manufacture of sugar from 93 whereas in 1999 41 factory at this time operated worked only. Heads mark absence of economic interest of cultivation of sugar beet, profitability on which only 10 %. Thus, the domestic production of sugar is marked by a rod in 1,2-1,3 million t. This year. And working capacities of factories are loaded only on 30-40 %. The general(common) manufacture since January till November of this year has made 4,4 million t. Against 6,25 million t. The last year. Under forecasts of experts manufacture for 2000 will make 5-5,2 million t. Or 85 % from volume of manufacture of the last year. Are kept the tendency of increase of densities of the sugar made from import syrtsa and the tendency of growth of consumption which in 1998 has made 33 kg. Per capita per one year, in 1999 – 34 kg. The volume of manufacture in the confectionery industry also grows.

For protection of own manufacture the Russian government establishes seasonal duties and quotas on export and import of sugar - syrtsa Russia. This year the government has established a quota on import 3,65 million t. With validity from December, 16 till December, 31. It means, that in this period the seasonal duty in 40 % is cancelled and owners of quotas can import sugar with 5 %-s' duty, and other participants of the market with the duty into 30 %. Realization of auction on sale of quotas is planned on the middle - end of November. Disputes are conducted about conditions of participation on auction, but under the application of government officials, on auction is planned to suppose all companies, including not having capacities. Any delay of his(its) realization will be the additional precondition for an internal rise in prices. The most probable participants of auction assume companies " Продимекс " (14 % of the sugar market, 7 sugar factories), "Alpha - eko" (8 % of the sugar market), "Rosprod", "Vesta-dominants", "SHugarimpeks".

The price review

The price for sugar is defined(determined) by many factors, among which:

  • Crop on a sugar cane in the countries exporters of sugar,
  • Import deliveries of sugar,
  • Crop on sugar beet in Russia,
  • Seasonal revival of demand (the summer - beginning dawn – upon demand for the packed sugar and sugar in bags on the part of the final buyer - a season of preparations, winter – revival of demand for sugar in bags on the part of the enterprises of the confectionery industry),
  • Tactical changes in the market.

Fluctuations of retail prices for the packed sugar depend on changes in melkooptovyh the prices which, in turn, are defined(determined) by wholesale prices. Today wholesale prices for sugar in bags on regions change from 12 up to 16 roubles for kg., with most frequently met value 13,5 roubles for kg. Rice 1. According to the largest traders, wholesale prices today on 15-20 % are higher than the prices of the years(summer) offer.

Melkooptovye the prices for granulated sugar for November change from 14 up to 16 roubles for kg. Monitorings melkooptovyh the prices for territories of Russia show the general(common) tendency of short-term drop in prices for the period since October till November of this year. Rice 2.

Partly this decrease(reduction) speaks deliveries on the market of granulated sugar from a domestic crop of sugar beet. If to compare to the prices for the years(summer) period the increase of the prices on all regions has made 30-35 %, or in 2 times concerning the prices for granulated sugar for the same period of the previous year. It is necessary to explain this growth by the general(common) excitement in the Russian market of sugar because of uncertainty of a protectionist policy(politics) of the state, recession of own manufacture and instability of the world market that is accordingly reflected on wholesale and melkooptovyh quotations.

The forecast

The tendency of growth of the world prices for sugar on the New York stock exchange, recession of a domestic production, increase of the prices at sugar on a home market, increase of quotations at gasoline and transport services, growth of consumption of sugar per capita and volumes of manufacture of the confectionery industry – the factors determining the current condition of the market – the market "is in a fever". These preconditions together with irresolute actions of the government on settlement of this market for rendering support to a domestic production of granulated sugar allow to assume the further growth wholesale, melkooptovyh and retail prices, especially, if the decision of the government on realization of auction on sale of quotas will again be tightened(delayed).


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