A.G. EDWARDS & SONS, INC.
One North Jefferson, St. Louis, Missouri
314-955-3050(March 9, 2000) SUGAR: Russian regulations and tariffs on sugar imports during 2000 have seemed to shift every few weeks. However, a recent report from Bridge News clarified the situation considerably. The current tariff is 5%, but it will rise to 15% in early April when the government levies an additional import duty. Officials say they are imposing the added charge during the course of an anti-dumping investigation. The seasonal 40% tariff designed to protect Russia's domestic industry will be imposed on June 15 and removed on December 15. The same officials stated that Russia had imported approximately 1.0 million tonnes (MT) of raw sugar during the first two months of the year. Traders generally expect the country to import between 3.5 and 4.0 MT during calendar 2000. Preliminary reports suggest the Asian giant will harvest 16- 18 MT of sugar beets this fall, easily surpassing the 1999 total of 13.9 MT.
Traders will most likely rush sugar to Russia before the early April rise in tariffs. This tripling of the current rate, to be followed by another tripling in mid-June offers strong incentives to move sugar quickly. In addition, the narrow window for moving the sugar in December (only 15 days versus 30 days in late 1999) could also increase the pressure to ship the product immediately.
Finally, the latest reports have confirmed Russia's intention to impose a quota system on sugar imports in 2001. That change significantly hardens the December 31 deadline for 2000 shipments. Given these circumstances, we suggest buying May sugar at 5.10 or better, risking to 4.79. Our objective is 5.75.
Dan Vaught
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