Russian Sugar Prices May Rise on Beet Harvest, Alfa Bank Says

Russian sugar prices may rise because of a decline in the quality of the sugar beets crop, Alfa Bank said today.

“Sugar beet harvest might be downgraded, thus supporting local sugar prices,” the Moscow-based bank, Russia’s biggest private lender, said in an e-mailed note. Sugar prices rose to 20 rubles (63 cents) a kilogram from 19 rubles a kilogram “recently” and may increase to 22 rubles a kilogram by the end of the year, the bank said, citing a forecast by the Institute for Agricultural Market Studies, known as Ikar.

A shortage of processing and storage capacity is forcing farmers to keep their harvests in the field, which reduces the sugar content, the bank said. Sugar output from beets may be below Ikar’s estimate of 4.5 million to 5.2 million tons for the 2011-2012 marketing season, Alfa said.

Ros Agro Plc, also known as Rusagro Group, said earlier this month it reduced sales volumes because of lower prices as a result of high yields for sugar and other agricultural products. The company fell more than 53 percent to $6.50 in London trading yesterday from Aug. 2, when Russian sugar refineries reported the start of output.

OAO Razgulay Group, another sugar and agricultural producer that planned to refine 1.6 million tons of its own sugar beets, has lost 49 percent to 24.87 rubles as of 1:43 p.m. Moscow time.

Russia’s sugar output reached 4 million tons on Dec. 6 from the start of the season on Aug. 1 and may reach 5.2 million tons by the time refineries stop processing beets in February, according to the Sugar Producers Union data. Russia’s sugar beet crop may more than double to 48 million tons this year, Viktor Zubkov, first deputy prime minister, said last month.

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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