- Nation may boost outbound shipments to 500,000 tons: Astarta
- Country’s output to rise 21% in 2016-17 season, ISO says
Ukraine is expanding its reach in the sugar market as rising production spurs the country to export the most sweetener in two decades.
Shipments will probably reach about 500,000 metric tons in the 2016-17 season as output exceeds domestic demand, said Mykola Kovalski, chief strategy officer of Astarta Holding N.V., the nation’s top producer, which processes beets into sugar. That would be the most since 1997-98, U.S. Department of Agriculture data show.
Output is rising after farmers expanded sugar-beet planting by about a fifth this year, and Astarta’s Kovalski said processing plants have become more efficient. The excess supply will help the country, which accounts for just a fraction of world exports, to ship to more than 20 nations this season, the Ukrainian Agribusiness Club said. Until now, Ukraine has traditionally exported sweetener mainly just to former Soviet states.
"Ukraine is becoming a player in the international sugar market," Kovalski said by e-mail last week. “This presence could be sustainable further on."
Even if exports reach 500,000 tons, that would equal just 2 percent of expected shipments from Brazil, the world’s biggest exporter, USDA data show. It would place Ukraine just outside the top 10 suppliers.
The nation’s production will rise 21 percent to 1.93 million tons in 2016-17, the International Sugar Organization estimates. That’s higher than the 1.7 million to 1.8 million tons forecast by Astarta, which expects domestic consumption to total 1.6 million tons, Kovalski said.
More exports may help ease tightness in the global white-sugar market, which is contending with prices near an almost four-year high. While Ukrainian sugar has never been used to settle ICE Futures Europe contracts in London, there has been speculation that more supply may allow that to happen. Ukraine’s port of Odessa on the Black Sea is one of the exchange’s approved delivery points.
It could make sense to deliver to the exchange because Ukrainian white sugar is trading at “steep discounts” to London futures, said Alban Bailbled, a trader with RCMA Commodities in Amsterdam, which trades mainly white sugar.
Only about 10 percent of Ukraine’s output meets the color specifications required by the bourse, Astarta said. There are also concerns about that supply meeting ICE’s other quality requirements and the country’s ability to load break-bulk shipments in a reasonable time, Bailbled said.
Naim Beydoun, a broker at Swiss Sugar Brokers in Rolle, Switzerland, is also skeptical about Ukrainian deliveries, and said previous trader talks on the subject have never amounted to anything.
Ukraine may find it difficult to export much of its sugar to destinations such as Kazakhstan, one of its main markets, because Russia is making transit through its territory harder, said Mykhaylo Ponomarenko, a Kiev-based consultant for Agritel.
Ukraine, which started this season with at least 250,000 tons of sugar stockpiles, is also looking at markets in the Middle East, Asia and Africa, Astarta’s Kovalski said.