28 February 2017
Ukrainian sugar producers started sales of new season (September-December 2017) production on forward terms.
Sugar operations in current season showed good profitability which is related to increase of world sugar prices and significant development of Ukrainian export (as a result, in line with our expectations, domestic sugar prices in Ukraine increased during last period of time and factually reached world prices (which is good for Ukrainian producers as well)).
So it is expected that sugar beets sown area in Ukraine in new season will grow by 15-20%. Even in case yields of sugar beets and sugar content in new season will somewhat decline from record-high levels of current season, total sugar production can be at least on the level of Y2016 – at about 2.0M tons, which means Ukrainian sugar export potential in new season will be at the level of 500-600k tons (under a/m assumptions).
To hedge part of risk related to potential changes in world sugar price Ukrainian producers started to sell part of their production to international traders on forward terms.
As we reported earlier, according to customs statistics, since the start of current season and till end of January Ukrainian companies already exported close to 400k tons of sugar (about USD 260M in money terms), which is record-high volume for the history of industry in Ukraine. TOP-5 groups accounted for 80% of Ukrainian sugar export in Y2016: Astarta Holding accounted for more than 40% of total export volume, Ukrprominvest – 24%, Radekhiv-Tsukor – 9%.