Astarta to significantly raise sugar beet planting in 2016 season

Ukraine’s leading sugar producer and soy processor Astarta (AST PW) reported on its spring sowing campaign on April 4. The company is going to sow 170,000 ha in spring crops, with the key focus on sugar beets (45,000 ha), corn (44,000 ha) and soybeans (42,000 ha).

Together with its earlier-reported autumn sowing campaign, the company is going to sow about 226,000 ha in the current season (-2% yoy, we estimate). The biggest increase in sowing area is going to be in sugar beets (+33% yoy, we estimate), while the biggest decline will be in soybeans (-34% yoy, we estimate). The sowing area of corn and winter wheat will increase 5% yoy and 11%, respectively.

Alexander Paraschiy: From this acreage breakdown, we conclude that Astarta will focus this season on its sugar business and reduce its exposure to the soybean-processing business. This looks logical, given that sugar prices remain strong in Ukraine (about 10% higher yoy, in dollar terms), while prices for soybeans, their meal and oil are lower yoy. On top of that, Astarta reported that it was efficiently focusing on soybean processing in its tolling contracts last year (accounting for 37% of its total soybean processing in 2015). Therefore, we believe Astarta’s chosen focus on its sugar segment this season will pay off.