Friday, 30 April 2010

Sugar Beet

Sugar beet looks like a viable spring crop option for this year and probably next.

Ukraine sugar beet area has decreased from 610,000ha in 2007 to 380,000ha in 2008 with a reduction in sugar production from 2.3MMT in 2007 to 1.3MMT in 2009.

From that 1.3MMT, 900,000MT is on contract to processors such as Kraft and PepsiCo. That leaves a domestic production balance of only 400,000MT.

Domestic consumption currently stands at 150 – 180,000MT/month, Ukrainians like sugar.

This means that Ukraine is effectively sugar free for 10 months of the year.

Ukraine will have to import raw and refined sugar from countries such as India and Brazil and sugar production in India has declined as farmers have opted for rice and wheat production rather than sugar cane.

After WTO accession, Ukraine negotiated a limit on the amount of imported raw cane sugar to 267,800MT for 2010. Additionally the weak Hrivner has reduced the profitability of importing raw cane sugar and will more than likely encourage exports rather than imports.

All these factors indicate a short fall in domestic supply against demand, a scenario that suggests an increase in the price of domestic sugar.

Is sugar beet an opportunity worth further investigation?

Some people obviously think so as sugar beet planting in Ukraine has jumped by 30%.