Wholesale prices for sugar in the 2019/2020 marketing year (MY, September-August) will increase by 18%, to UAH 13,000 per tonne due to a decrease in production, the press service of the Ukrtsukor National Association of Sugar Manufacturers has said. According to the association, sugar production in the 2019/2020 MY will amount to 1.1-1.2 million tonnes.
“The decrease is primarily due to the reduction in the area under sugar beets and adverse weather conditions. The lack of moisture in the soil affected the development of sugar beets and as of August 1 sugar beets are massively losing the weight of the tops, which, in turn, will lead to low sugar content,” еhe press service said citing deputy chairman of the board of Ukrtsukor Ruslan Yanenko.
In addition, agronomists note common root diseases.
“According to our estimates, 32 sugar enterprises will work this season,” Yanenko said.
As reported, sugar production in the 2018/2019 MY decreased by 15%, to 1.82 million tonnes. In the season, 42 sugar factories worked.
Ukraine as of July 22 had fully used quotas for duty-free exports of agricultural products to the EU on nine groups of goods, including honey, sugar, cereals and flour, processed starch, processed tomatoes, grape and apple juice, wheat, corn, and butter. According to a press release from the Ukrainian Agribusiness Club (UAC), the pace of quota use and revival of trade with the EU is noticeably accelerating, as on the same date last year seven quotas for duty-free exports from Ukraine to the EU were used.
“Potentially, quotas for barley (79% are now used), poultry (75%), malt and wheat gluten (58%), and starch (53%) will be used by the end of the year,” the association noted.
The UAC said additional quotas for eight groups of goods come in force from October 2017 for a period of three years: for honey, flour and cereals, processed tomatoes, grape and apple juice, oats, corn, wheat, and barley. As of July 22, five of the additional quotas were used: for honey, cereals, juice, wheat, and corn.
AGRI PRODUCTS, APPLE JUICE, CEREALS, CORN, DUTY-FREE EXPORTS, EU, GRAPE, HONEY, SUGAR, WHEAT
Ukraine for the ten months of the 2018/2019 marketing year (MY, September-August) exported 403,000 tonnes of sugar, which is 20% less than during the same period of the previous MY, the press service of the Ukrtsukor National Association of Sugar Producers has said. “It is likely that, according to the results of the current marketing year, sugar exports will amount to about 500,000 tonnes. This is 10% less than in the previous MY. The decline in supplies is due to low world sugar prices and an unfavorable market situation,” Ruslana Butylo, the deputy chairman of the association, said.
According to the association, sugar exports in June 2019 decreased by 40% compared with May and amounted to 24,800 tonnes.
“Azerbaijan remained the main importer of Ukrainian sugar in June, but Libya competed with it: these two countries accounted for 28% of total exports. Also, significant deliveries were made to Georgia and Tajikistan (12% and 10% respectively),” the expert said.
Sugar production in Ukraine in the new season could fall by 23-29%, to 1.3-1.4 million tonnes, and the number of sugar refineries from 42 operating this season to 343-35, the Ukrtsukor national association of sugar producers has said.
“We are already seeing a reduction in the acreage of sugar beet this year and, of course, it will have its own “imprint” this autumn, when significantly fewer sugar refineries are launched compared with the 2018/2019 season. According to our estimates, it will be 34-35 enterprises, while in the current season 42 refineries worked,” Deputy Chairperson of the association Ruslana Butylo said.
According to her, given the reduction in acreage and the number of operating refineries, caused by the global sugar surplus, a significant reduction in sugar production and price hikes are predicted.
“The global surplus of recent years has not had the best effect on the state of sugar production in Ukraine. Excess sugar “pressed” on prices and lowered them more and more, far beyond the break-even point of production, diluting all financial reserves of producers, both in the world and in Ukraine. At the moment, it is rather difficult to predict the yield and sugar content of beets, the sowing of which is almost completed. However, we can assume that sugar will be 23-29% less this autumn – 1.3-1.4 million tonnes. This is the lowest amount of production since 2013,” Butylo said.
Astarta agricultural holding, the largest sugar producer in Ukraine, in January-March 2019 saw a fall in sugar sales by 42% year-over-year, to 53,960 tonnes, the company has reported on the Warsaw Stock Exchange (WSE) on Wednesday.
According to the press release, the sales of wheat for the period fell 78.7%, to 10,750 tonnes, sunflower by 42%, to 11,830 tonnes, and milk by 7%, to 26,020 tonnes.
At the same time, sales of corn increased 3.3-fold, to 304,210 tonnes, barley – from 9 tonnes to 2,410 tonnes, soybean oil – by 13%, to 14,220 tonnes, and soybean meal – by 11%, to 46,870 tonnes.
The company said that at the same time, the average sugar prices for this period decreased 15%, sunflower 10%, soybean oil 16%, while wheat grew by 20%, corn by 23%, barley by 1.8 times, soybean meal by 1%, and milk by 15%.
Astarta is a vertically integrated agricultural holding operating in five regions of Ukraine.
After three years of lucrative work, Astarta agricultural and industrial holding saw EUR 21.11 million in net loss in 2018 due to worsening of financial indicators and poor conditions on both sugar and grain markets. According to the company’s yearly report posted in the website of the Warsaw Stock Exchange on April 8, last year its earnings reduced by 18.8%, to EUR 372.22 million, EBITDA dropped by 52.4%, to EUR 56.87 million, and export declined by 3 percentage points, to 56%.
In addition, Astarta’s net debt increased by 2.3 times, to EUR 295.45 million, in 2018.
“We are well prepared for 2019 and showing cautious optimism. The company has revised its investment program, adjusted its sales policy and improved its credit portfolio and spending patterns,” founder and Director General of Astarta Viktor Ivanchyk said in the report.
The company earned EUR 119 million in the sugar segment (32% from consolidated revenue) in 2018. Its sales are estimated at 325,000 tonnes (27% less than in 2017) while its prices dropped by 23%. The company explained drop in sales by weak pricing environment and increased costs value of products due to poor quality of the beet harvest in 2018. Export accounted for 40% from sales in 2018.
According to the report, Astarta estimated its share in sugar production of Ukraine at 21%.
The company earned EUR 127 million in the crop production segment (34% from consolidated revenue). Astarta constructed three grain elevators with a total capacity of 230,000 tonnes in 2018.
Astarta earned EUR 74 million in the soybean processing segment (20% from consolidated revenue), which is 2% more than in 2017. The company produced 42,000 tonnes of soybean oil and 141,000 tonnes of oil cake.
The company’s revenue in dairy farming dropped by 8%, to EUR 29 million, in 2018.
Astarta is a vertically integrated agribusiness holding operating in Poltava, Vinnytsia, Khmelnytsky, Ternopil, Zhytomyr, Chernihiv, Cherkasy, and Kharkiv regions. The holding includes eight sugar factories, agricultural enterprises with a land bank of about 250,000 hectares and dairy farms.
