The European Commission has approved the sale of 500,000 tonnes of out of quota sugar within the EU. The additional levy of Euro 500 that usually applies to out of quota sugar will not apply.
EU quota sugar is approximately 13.9 million tones. EU consumption is approximately 16.5 million. EU exports and imports account for the difference. Some out of quota sugar can be exported while the remainder is sold either to industry or as food. The additional levy is applied when out of quota sugar is sold as food.
Starting stocks plus in quota sugar plus imports are meant to cover EU consumption but high world sugar prices have made sugar imports difficult.
The customs union between Russia, Kazakhstan and Belarus has confirmed that Russia will reduce its import tariff on raw sugar from $140 to $50 per tonne for a period of two months commencing 1st March 2011.
Following bad weather Russia is facing a reduced beet harvest and the revised tariff is to facilitate sugar imports without causing sharp price rises. Agflation and rising food prices have resulted in political instability in other countries.
Refineries in Russia had recently reduced white sugar production in anticipation of the decision.
Iraq’s state run food company has purchased 200,000 tonnes of white sugar which accounts for approximately 25% of its annual consumption. The purchase was made by the Foodstuffs Trading Company at a price in excess of $900 per tonne on a CIF basis. Iraq consumes approximately 800,000 tonnes annually.
Iraq’s two sugar mills have not produced sugar since the invasion of Iraq in 2003 which has led the state to purchase sugar through open tenders. The mills may be operational again in the near future. Recent protests in Iraq over the rising price of food have led the state to move to secure sugar supplies.
Russian raw sugar imports are expected to be down for 2011 to 1.9 million tonnes from 2.1 million tonnes in 2010. Domestic production of beet sugar is likely to be at a historical high in the region of 4.2 million tonnes. Russia recently decided to cut tariffs on raw sugar imports to $50 effective from March. A move that may see a temporary slowing in imports until the tariff becomes effective.
High domestic beet sugar production may result in imports slowing in the second half of the year when further downward pressure on domestic prices is expected.
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