Russia will produce 5.5m tonnes of sugar this season, down by over 25% year-on-year.
Less beet has been planted and its growth has been hindered by extremely dry weather.
However, sugar stocks are high so the strong export pace should continue.

Production Dips After Heatwave

We think Russia will produce 5.5m tonnes of sugar in 2020/21; this is a 500k tonne reduction from our previous estimate.
If this materialises, it will be Russia’s poorest sugar production for five years and 2.1m tonnes below last year’s record crop.

The reduction stems from the recent heatwave, which has not been good for beet growth.

Temperatures have been as high as 42° in the South with very little rain, especially towards the East of this region.
Rainfall has been plentiful in the Central and Eastern regions, but it has been very stormy with limited sunlight, the latter of which is essential for beet growth.
Some reports suggest that grain crops here could face losses of up to 40% due to the dry weather.

We have therefore reduced our yield estimate for the 2020/21 season.
We think yields will be higher than they were in 2018/19 when there was a severe drought in Russia.
This is because the beet planting density has increased by 5% since then.

Beet Growth Was Very Slow in July

In July, the average sugar beet root weight increased by 192 grams; 17% lower than the previous years’ average.

The sugar beet weight progression aligns with that of the poor 2018/19 season.

These beet tests are important because there is a very strong link between the weight of the beet roots at the start of August (the fourth test) and the eventual sugar yield.

Sugar Beet Area: A Sharp Decline

Russia’s beet area has dropped significantly this season meaning its harvested area will fall by over 200k ha (18%).

After last season’s overproduction, Russia’s domestic sugar prices halved over the course of 2019, leaving farmers less incentivised to plant sugar beet due to its low profitability.
At its lowest point, the domestic price was equivalent to $280/t.

A Large Surplus Means Exports Will Stay Strong

This production decrease puts Russia back into deficit, as they are set to consume about 500k tonnes more sugar than they produce next season.
Fortunately, sugar stocks are high following last season’s record crop and a COVID-induced drop in consumption.

With such high stocks, Russia will have 1.3m tonnes of white sugar available for export.
If the price incentivises it, there will be 1.3m tonnes of exports, similar to the last season.
Most of this sugar will go by rail to neighbouring countries such as Kazakhstan, Uzbekistan, and Azerbaijan.

For a more detailed view of Russia’s forthcoming sugar exports, please see this previous report.

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Ben Seed

Ben joined CZ’s analysis team in 2016 on a year long internship before returning to the University of Bath to complete an Economics Degree. Since re-joining in August 2018, Ben has led the data insights team in expanding the range and quality of data available internally and to clients through CZ App. Ben spent 3 months in CZ’s Singapore and Bangkok offices to expand his knowledge of the region and help roll out the latest data processes. He is now also responsible for the Sugar Market View published each week on CZ App.