The Cabinet of Ministers of Ukraine included sugar (trade item according to UKTVED 1701) to the list of goods, export of which is subject to licensing for the period from June 5 to September 15, 2023.
According to the representative of the Cabinet of Ministers in the Verkhovna Rada Taras Melnychuk in Telegram, the relevant decision was taken at a government meeting on Tuesday.
“Amended Annexes 1 and 5 to the resolution of the Cabinet of Ministers of 27.12.2022 N 1466 “On approval of the lists of goods, exports and imports of which are subject to licensing and quotas for 2023”. Sugar has been included in Appendix 1 “Quotas for the goods subject to export licensing” of the decree ¹ 1466 with a volume of quota of 0 tons and a licensing period from June 5 to September 15, 2023,” he wrote.
At the same time, sugar is excluded from Annex 5 of the same decree “The list of goods, the export of which is subject to licensing.
Global raw sugar prices remain around $0.26 a pound on fears of supply cuts, Trading Economics reported.
That’s close to a high of more than 11 years (since October 2011) of $0.27 a pound reached in late April.
The International Sugar Organization (ISO) in its May report sharply worsened its forecast for sugar oversupply in the 2022/23 crop year to 850,000 tons from 4.12 million tons a month earlier. This is due to a downward revision in expected supplies from key regions such as Europe, China, Thailand and India.
ISO estimates sugar production this year at 177.36 million tons, compared to the previous forecast of 180.43 million tons. Meanwhile, its global consumption will rise to 176.51 million tons.
“We’ve gone from an expected sugar surplus this year to no surplus at all,” believes Frank Jenkins, president of independent broker JSG Commodities.
Just a few months ago, he expected sugar production to exceed demand by about 4 to 6 million tons. “Because of crop losses in India, China, the European Union, Thailand and Mexico, those estimates have essentially dropped to a balance level, so there’s no real surplus to speak of,” said the expert, quoted by Barron’s.
“Unfavorable weather has become a much bigger problem for all agricultural products, including sugar,” believes Robin Shaw, an analyst at brokerage Marex. “The real enemy of sugar is drought,” and there are more of them around the world, he added.
Shaw predicts that sugar demand is likely to exceed production by 6 million to 7 million tons over the next three years. He previously expected a surplus of about 4 million tons this year.
To unfavorable weather, “you can add potential yield declines due to high fertilizer prices in the last couple of years, which is not helping the sugar market,” said John Stansfield, senior sugar analyst at consulting firm DNEXT Intelligence, John Stansfield.
About 80% of the world’s sugar production comes from sugar cane and 20% from beets, according to ISO. The largest producers are Brazil and India, as well as the EU and Thailand.
Ukrainian sugar producers have asked EU countries to reconsider the sugar export ban on domestic EU markets and resume it taking into account the sugar shortage in Europe, Nazar Mykhailovin, acting head of Ukrtsukor, said.
“Not all countries impose an embargo on Ukrainian products. We need a way through which we can sell exports of sugar. We have to forget about the sea route for some time, but the transit through the EU countries, particularly through Poland and Romania is needed,” he commented to Interfax-Ukraine agency about the situation with the export of Ukrainian sugar to the EU.
According to the industry association, during the period from June 2022 to March 2023 almost 99.9% of Ukrainian sugar was sold on the EU internal market.
The top countries that bought Ukrainian sugar in March 2023 included Romania, Poland, Hungary, Italy, Bulgaria, the Czech Republic and Croatia. Poland, one of the first to ban imports of Ukrainian sugar, bought 8,242 tons of the product from Ukraine, Mikhailovin said.
“Since the beginning of the war, Ukraine has lost its sea export corridor, which has become inaccessible for Ukrainian sugar. Accordingly, the export was carried out mainly to European countries.
At the same time Mikhailovin reminded that due to the beginning of the war the EU made a decision, thanks to which and the presence of export potential Ukraine has the ability to export sugar to the EU domestic markets.
In the sugar beet sugar production season of the 2022 harvest, the factories produced 1.330 million tons of products, which fully met the needs of the domestic market and export potential, the industry association said.
“In the 2022/2023 marketing year, the export potential will depend on the area sown under sugar beet, weather conditions and yields in both Ukraine and Europe,” Mikhailovin said.
Ukraine managed to export 265 thousand tons of sugar in 7 months of the current marketing year (MY, September 2022 – August 2023), which is 4.8 times more than in the entire 2021-2022 marketing year, said Nazar Mykhailovyn, acting Chairman of the Board of the National Association of Sugar Producers of Ukraine Ukrtsukor.
“For the entire period of 2021/2022 MY, 55 thousand tons of sugar were exported. From September 1, 2022, to March 28, 2023, Ukraine increased exports by 4.8 times to 265 thousand tons,” he said in an interview with Interfax-Ukraine.
According to Mikhailovin, in 2022, 23 Ukrainian sugar factories produced 1.33 million tons of sugar, while a year earlier 33 enterprises produced 1.45 million tons. “The reduction in sugar production by 120 thousand tons with 30% of production capacities not used was not critical for Ukraine. In addition, we had a surplus and significant carry-over balances from 2021/2022 MY in the amount of 491 thousand tons,” the head of the association said.
He reminded that as of the beginning of the war, sugar exports from Ukraine were suspended due to the hostilities. On June 5, 2022, the Cabinet of Ministers adopted a resolution to allow sugar exports under licenses issued by the Ministry of Economy. Due to the hostilities and the lack of seaports, Ukraine was forced to change the geography of exports. According to the European Union’s decision, Ukraine can ship sugar to Europe without tariff quotas and duties.
According to Mykhailovyn, due to drought and poor sugar beet harvest, as well as higher natural gas prices than in Ukraine, Europe produced less sugar, and it was more expensive than Ukrainian sugar. “Ukraine was able to sell sugar in Europe at a decent price,” he stated.
The government of Ukraine has abolished the need to obtain the approval of the State Reserve when issuing licenses by the Ministry of Economy to import raw cane sugar to Ukraine within the tariff quota.
The corresponding decision within the framework of the economy deregulation was taken by the government on Tuesday, as quoted by the Vice Prime Minister and Head of the Ministry of Economy Mykhailo Fedorov.
The issue of optimization of this agreement was previously considered by the interdepartmental working group on the accelerated revision of instruments of state regulation of economic activity, which was chaired by him and First Deputy Prime Minister – Minister of Economy Yulia Sviridenko.
As it was reported, the Interdepartmental Working Group on Accelerated Revision of the Instruments of State Regulation of Economic Activity was created by the government on January 13, 2023 with the purpose of simplifying the regulatory environment for business.
Agricultural holding “Astarta”, the largest sugar producer in Ukraine, in October-December 2022, reduced sales of the product by 27.7% compared to the same period in 2021 – up to 62.1 thousand tons, but its average selling price rose by 43.6% – to 25.62 thousand UAH per ton.
According to the agrarian group’s report on the Warsaw Stock Exchange on Tuesday evening, milk sales in the fourth quarter of 2022 increased 9% to 26,500 tons.
Soybean oil sales jumped 75.3% to 10,700 tons, wheat 2.9 times to 135,200 tons, and rapeseed more than 2.9 times to 12,400 tons,
At the same time, soybean meal sales fell by 8.2% to 26.5 thousand tons, sunflower seed – by 8.3% to 23.3 thousand tons, corn – 4 times to 82 thousand tons.
Agroholding specified that the average cost of soybean oil sold in October-December, 2022 increased by 28.1% up to 44.67 thousand UAH/ton, soybean meal – by 23.5% up to 17.54 thousand UAH/ton, milk – by 8.8% up to 13.73 thousand UAH/ton, corn – by 66.5% up to 9.6 thousand UAH/ton, wheat – by 25.3% up to 9.4 thousand UAH/ton.
Only sunflower seed went down in price – by 7.4%, to 15.94 thousand UAH/ton.
Thus, taking into account the volume of sold products and their average price, we can tentatively estimate the growth of Astarta’s revenues in the fourth quarter of last year compared to the fourth quarter before last year at 7.4% – up to UAH 5 billion 796.4 mln. In particular, sugar decreased by 3.7% to UAH 1 billion 589.5 million, wheat – 3.6 times to UAH 1 billion 270.3 million, rapeseed – almost 2.9 times to UAH 280.3 million, soybean oil – 2.2 times to UAH 488.6 million, soybean meal – by 13.4% to UAH 644.7 million and milk – 18.6% to UAH 363.2 million.
Meanwhile, sales of corn decreased 58.8% to UAH 787.7 mln, while sunflower sales decreased 15% to UAH 372.1 mln.
The company also reported that to date it has harvested corn from 90% of the area, its average yield is estimated at 9 tons per hectare.
“Astarta is a vertically integrated agro-industrial holding operating in eight regions of Ukraine. It consists of six sugar factories, farms with land bank of 220 thousand hectares and dairy farms with 22 thousand cattle, oil extraction plant in Globino (Poltava region), seven elevators and biogas complex.
In 9M2012, Agropromholding received EUR102.2 mln, which is 11.7% more than in 9M2012. 9M2012 Agroindustrial Holding received net profit amounting to EUR 102.2 mln, which is 39.3% less compared with the same period of the previous year, while its revenue increased by 13% – to EUR 341.3 mln.
In UAH terms Astarta’s net profit for 9M2012 decreased to EUR 341.3 mln. Astarta decreased its net profit by 38.6% – to UAH 2 bln 76.15 mln, while its revenue increased by 14.7% – to UAH 11 bln 268.54 mln.
