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Last week, wholesale sugar prices continued to rise. The main reason for this increase is the significant depreciation of the ruble, which has lost 16% since the beginning of November. The devalued ruble makes Russian sugar more competitive on the international market and stimulates its export. In addition, with current inflation levels (around 8%), especially food inflation (around 20%), sugar is severely undervalued. Persistent price lag of sugar compared to general inflation may lead to the degradation of sugar and sugar beet production.
Our analysis of export operations of Kazakhstan and Kyrgyzstan, which are members of the EAEU, showed an abnormal growth in sugar exports from these countries. The export started in September 2023 when Russia introduced an export duty, and the total volume was about 110 thousand tons. Essentially, this is a re-export of Russian sugar. An additional advantage of such "re-export" is the difference in railway tariffs when delivering Russian sugar to Kazakhstan and transiting to countries outside the EAEU. The tariff difference for sugar delivery to Kazakhstan and Uzbekistan from the Central and Volga Federal Districts is about 6 rubles per kilogram.
Sugar balance in Russia for 2024/25 (estimate)
| 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 (optimistic estimate) |
2024/25 (pessimistic estimate) |
|
| *** | *** | *** | *** | *** | *** | *** | *** | *** |
| ending stocks (thousand tons) | 5368 | 7257 | 4809 | 9964 | 15522 | 15720 | 887 | 387 |
The approximate cost of white sugar from raw sugar (including VAT and duties) is 917.41 dollars per ton (99.09 rubles per kilogram).
As of November 28, 2024, the cost of sugar from imported raw sugar:
- in Uzbekistan is 772.4 dollars per ton (73.17 rubles per kilogram in Krasnodar including delivery) without VAT and duties;
- in Kazakhstan - 705.3 dollars per ton (71.54 rubles per kilogram in Krasnodar including delivery).
According to Sugar.ru estimates, sugar imports from Belarus for the first two weeks of November remained at the level of the previous month. About 22 thousand tons of sugar were received (30 thousand tons in October).
The pace of Russian white sugar exports has increased, with a total of about 64 thousand tons exported (by rail and road transport). Kazakhstan remains the main recipient of Russian sugar (about 48 thousand tons). The supply to Tajikistan and Uzbekistan has significantly decreased (potentially, some of the Russian exports to Kazakhstan actually end up in these countries).
During the reporting period, Russian raw sugar exports almost doubled - about 30 thousand tons, compared to 25 thousand tons for the entire October.
The estimate for sugar and raw sugar exports in November remains unchanged - 125 thousand tons. The export estimate for the first 4 months of the season is 375 thousand tons.
