2006-2007 Sugar Production Forecast Revised Downward?

A source in the Ukrsugar Association told Ukrainian News that sugar production in Ukraine for the season starting in September 2007 was revised downward to 1.3-1.4 mln, compared to 1.5-1.6 mln mt that was expected earlier, and 2.5 mln mt production in 2006-2007. According to the source, the forecast was decreased due to the drought affecting the south of Ukraine. The Ukrsugar Association is the organization that makes recommendations to the government on the distribution of sugar production quotas. Olha Pankiv: Southern Ukraine is not famous for its beet-growing areas, thus we would rather wait for official confirmation of a revised forecast. Nevertheless, if officially confirmed by the Association, it would push sugar prices up, as the new sugar production forecast implies a slight sugar deficit next season (0.7 mln mt of inventory from 2006-2007 plus 1.3-1.4 mln projected production in 2007-2008, compared to internal consumption estimated at 2.1-2.2 mln mt). Dakor’s management (DAKOR: BUY) says that the drought has not affected Western Ukraine, where their beet fields are located. In our projections for Dakor’s 2007 results, we were conservative in terms of beet collection per ha to account for the possibility of bad weather: 35 ths mt per ha compared to management’s projections of 45 ths mt.