W11 Sugar Update: Russia's Sugar Export Ban and Peru's Sugarcane Industry Expansion

Published 2024년 3월 22일

In W11 in the sugar landscape, Russia's proposed temporary sugar export ban aims to balance domestic needs with export commitments, driven by a projected sugar production increase and surging export volumes to traditional and new markets. Except for deliveries to EAEU members, the ban, set until August 31, 2024, seeks to stabilize domestic prices and ensure sufficient reserves. Meanwhile, private investment fuels growth and efficiency in Peru's sugarcane industry, with significant investments leading to expanded cultivation areas, competitive yields, and increasing export opportunities, notably to the US, Colombia, and Europe.

Russia Proposes Temporary Sugar Export Ban to Balance Domestic Needs and Export Commitments

The Russian Ministry of Agriculture has proposed a temporary ban on sugar exports from Russia until August 31, 2024, except for deliveries to Eurasian Economic Union (EAEU) member states. Sugar production in Russia is projected to reach 6.8 million metric tons (mmt) in the current season, a 9.8% year-on-year (YoY) increase. This growth is attributed to a significant sugar beet harvest of 53.1 mmt in 2023.

Improved logistics, resolved payment issues, and competitive pricing have facilitated Russia's return to traditional sugar export markets and opened new destinations like Turkmenistan, Afghanistan, Türkiye, North Korea, and Senegal. Since the beginning of the season (August 1, 2023), sugar exports have surged by 3.3 times YoY, exceeding 700 thousand metric tons (mt). Rail transportation dominates exports, with some volumes shipped by road and containerized sea freight.

The proposed ban aims to strike a balance between domestic sugar consumption (approximately 6 mmt annually) and fulfilling Russia's export obligations within the EAEU framework. Ensuring sufficient sugar reserves at the end of the season is crucial to prevent price fluctuations in the domestic market. This temporary export ban will likely stabilize domestic sugar prices in Russia. EAEU member states will continue to receive sugar imports from Russia under permit regulations. The ban may affect the growth momentum of Russia's sugar exports to non-EAEU countries.

Private Investment Fuels Peruvian Sugarcane Industry Growth and Efficiency

The Peruvian sugarcane sector has witnessed significant growth and improved efficiency in recent years, driven by private investment. Since the start of the private investment trend in Peru's sugarcane sector in 1997, the industry has attracted approximately USD 1.8 billion. This includes acquisitions of traditional mills and investments in new ventures. Private investments have facilitated the expansion of sugarcane cultivation by over 30 thousand hectares (ha) in the past decade, bringing the total cultivated area to 83 thousand ha. Peruvian sugarcane yields are also globally competitive, averaging between 125 and 130 mt/ha compared to 90 mt/ha in Brazil. The possibility of year-round harvesting in Peru further enhances this advantage.

Peru currently produces around 12 mmt of sugarcane annually, with La Libertad leading the way as the primary producing region (52% share). Lambayeque (15%) and Lima provinces (12-14%) follow, with Piura and Áncash contributing smaller volumes. Peruvian sugar production ranges from 1 million to 1.2 million tons annually. Climatic factors, particularly temperature, significantly impact sugar yield. High temperatures tend to reduce sugar content in sugarcane, as evidenced in 2023 when national sugarcane production increased by 5% while sugar production itself decreased by 5% due to the El Niño phenomenon. Peru exports approximately 10% of its domestically produced sugar, primarily to the United States (US), Colombia, and Ecuador. The global sugar deficit has opened new export opportunities for Peru, with recent shipments reaching Europe.