7th Jun 2013, by Agrimoney
This year's collapse in Russian sugar beet production will not set a trend, with growth set to recover to demote the country well down the league of importers of the sweetener, while China rises up it.
Russian beet sowings, which this year plunged 30% according to domestic processor Ros Agro, are poised for long-term growth, thanks to the needs of the country's expanded processing industry, and "considerable market protection" thanks to a system of variable rate tariffs, Rabobank said.
While beet, as an annual crop, competes with grains for land – with elevated wheat prices after 2012's drought-hit harvest fuelling the slump in beet sowings – Russia's import levy, effectively fixed at $140 a tonne, will in normal years provide the root crop an advantage
"There is good reason to believe that sugar and beet prices over the long term are likely to continue to be supportive of beet production," the bank said in a report on long-term sugar market trends.
With Russian sugar output growing to 5.8m tonnes in 2021, and consumption growth constrained by a falling population, the country "inevitably" faces a "significant decline in import requirement" over the period.
"Russia's trend import requirement will have dwindled to less than 500,000 tonnes" by 2021, well below the levels of 4m-5m tonnes of the 1990s which promoted the country to top of the world sugar import league.
'Deficit to widen'
The trend in Russian sugar contrasts with that expected for China, whose production deficit will grow despite a government target of 85% self-sufficiency, and growth in cane sugar production seen rising 44% to 16.3m tonnes in the decade to 2010-21, with beef sugar output soaring 95% to 2.1m tonnes.
"Even at this level of output, China's self-sufficiency ratio is expected to reach no more than 80%," Rabobank said.
"Although production is projected to grow significantly, robust growth in consumption is expected to more than offset rising output," boosted by rocketing demand from the food and drinks industry.
The sugar production deficit in China, which will import 3.0m tonnes of sugar in 2012-13 according to International Sugar Organization estimates, will "gradually widen" to some 4m tonnes, a factor that processors are preparing for by expanding capacity in areas handy for cane or raw sugar imports.
"The local sugar refining industry is positioning for the anticipated growth in import demand, with new refinery developments underway along the Chinese coast," Rabobank said.
World prospects
The comments contrast with those from the OECD and UN Food and Agriculture Organization on Thursday in a benchmark report which forecast China's import needs rarely rising above 3m tonnes over the next decade.
"China's recent import growth should slow down significantly compared to the last decade, and remain below the peak reached in 2011," the report said, flagging the potential for sugar output to grow by 2.7% a year to 2022.
Cane area was expected to rise by 13% by then, with beet area to rise by 55% to some 0.4m hectares.
However, Rabobank and the OECD-FAO were in close agreement on the overall world trends.
Rabobank placed world output at 204m tonnes in 2020-21, and consumption at 203m tonnes.
The OECD-FAO pegged world output in the season at 203.7m tones, and consumption at 196.8m tonnes, compared with production of 180.5m tonnes and use of 173.1m tonnes in 2013-14.
This year's collapse in Russian sugar beet production will not set a trend, with growth set to recover to demote the country well down the league of importers of the sweetener, while China rises up it.
Russian beet sowings, which this year plunged 30% according to domestic processor Ros Agro, are poised for long-term growth, thanks to the needs of the country's expanded processing industry, and "considerable market protection" thanks to a system of variable rate tariffs, Rabobank said.
While beet, as an annual crop, competes with grains for land – with elevated wheat prices after 2012's drought-hit harvest fuelling the slump in beet sowings – Russia's import levy, effectively fixed at $140 a tonne, will in normal years provide the root crop an advantage
"There is good reason to believe that sugar and beet prices over the long term are likely to continue to be supportive of beet production," the bank said in a report on long-term sugar market trends.
With Russian sugar output growing to 5.8m tonnes in 2021, and consumption growth constrained by a falling population, the country "inevitably" faces a "significant decline in import requirement" over the period.
"Russia's trend import requirement will have dwindled to less than 500,000 tonnes" by 2021, well below the levels of 4m-5m tonnes of the 1990s which promoted the country to top of the world sugar import league.
'Deficit to widen'
The trend in Russian sugar contrasts with that expected for China, whose production deficit will grow despite a government target of 85% self-sufficiency, and growth in cane sugar production seen rising 44% to 16.3m tonnes in the decade to 2010-21, with beef sugar output soaring 95% to 2.1m tonnes.
"Even at this level of output, China's self-sufficiency ratio is expected to reach no more than 80%," Rabobank said.
"Although production is projected to grow significantly, robust growth in consumption is expected to more than offset rising output," boosted by rocketing demand from the food and drinks industry.
The sugar production deficit in China, which will import 3.0m tonnes of sugar in 2012-13 according to International Sugar Organization estimates, will "gradually widen" to some 4m tonnes, a factor that processors are preparing for by expanding capacity in areas handy for cane or raw sugar imports.
"The local sugar refining industry is positioning for the anticipated growth in import demand, with new refinery developments underway along the Chinese coast," Rabobank said.
World prospects
The comments contrast with those from the OECD and UN Food and Agriculture Organization on Thursday in a benchmark report which forecast China's import needs rarely rising above 3m tonnes over the next decade.
"China's recent import growth should slow down significantly compared to the last decade, and remain below the peak reached in 2011," the report said, flagging the potential for sugar output to grow by 2.7% a year to 2022.
Cane area was expected to rise by 13% by then, with beet area to rise by 55% to some 0.4m hectares.
However, Rabobank and the OECD-FAO were in close agreement on the overall world trends.
Rabobank placed world output at 204m tonnes in 2020-21, and consumption at 203m tonnes.
The OECD-FAO pegged world output in the season at 203.7m tones, and consumption at 196.8m tonnes, compared with production of 180.5m tonnes and use of 173.1m tonnes in 2013-14.
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