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India and Brazil may bounce back and forth between larger and smaller crops, but in terms of structural changes, there are few among them. If India could get its crop cycle to smooth out and be consistent, that would be a boon for global sugar supply and price stability. If Brazil invested as it should and boosted cane production in line with demand, that too would change the structure of the world market.

But what if the world’s largest importer suddenly became an exporter? That would certainly shift the balance of things, wouldn’t it? Europe may very well do that post-2016 when potential reforms mean that quotas could become a thing of the past, but they’ll still be limited by WTO regulations unless they can convince the powers that be that there are no more subsidies so no more need to be reined in.

Yet Europe isn’t the world’s largest importer, Russia is. Or was. And without the bulky bureaucracy that comes along with the European Commission and the Common Agriculture Policy. In the course of just a couple of years, Russia was able to make the decision to become an exporter and actually get that policy implemented into reality.

So here comes 2011/12 with all hands on deck. Literally. Last year at this time there were only 70 factories online and refining beet while this year there are 77. As a result, production is up big time with 2.59 million tonnes of sugar produced as of the end of October, 42% more than produced last year at this point.

There is little doubt that when Russia says it’s going to become a sugar exporter this year that it is serious about it. Succeeding is another question, but they’re likely to get pretty close.

For the first time in a decade, the country has successfully shipped domestic sugar by sea. Granted, it was only 160 tonnes, but it was only a test and certainly only a start. Some analysts believe that Russia’s plans to export via sea transport are too lofty, and costly, never able to compete with Brazil. Instead it is felt they should focus on land transport to their Central Asian neighbours.

Of course, Brazilian sugar is only cheaper compared to Russian sugar when it’s actually available.

Already there are estimates that Russia could export as much as 250,000 tonnes of sugar for 2011/12, with the government itself expecting at least 200,000 toones, thanks to production of beet sugar potentially reaching upwards of 5 million tonnes. Domestic consumption is around 5.6 million tonnes, so between exports and the supply gap in production, there will still be a need for at least 850,000 tonnes of sugar from refined raws and tapping into last year’s stocks. That demand could be higher if a harsh winter destroys stored beets before they’re processed, but never doubt Russian optimism in the face of a harsh winter.

The government says it has plans to cut or eliminate raw sugar imports all together beginning next year if this year’s crop goes as well as it is hoped. Traditionally the import duty on raw sugar that is high during the country’s sugar production season falls during the summer to allow for imports. But the deputy Prime Minister said two weeks ago that they may stop raw imports all together while the deputy economy minister said there was a proposal to not lower the duty at all.

He even went so far to say that the country could reach self-sustainability this year, indicating production could be as high of the entire 5.6 million tonnes plus exports, higher than the official government estimate of 5 million tonnes.
Czarnikow said last month that with the bumper beet crop expected, it thought raw sugar imports would halve to 1.2 million tonnes—rather than be eliminated all together—and agreed that it was likely to export as well.

So even if raw sugar imports are only halved, rather than eliminated all together, that suddenly opens up 1.5 million tonnes of raw sugar availability for someone else who may want it. The European refiners would certainly like to get their hands on that sugar, but no doubt there would be competition for it especially from the likes of China.

Then of course there’s the 250,000 tonnes of white sugar availability that is now going to become part of the annual landscape, if Russia can keep its factories running and its farmers happily planting beet. It’s not a huge supply but it will certainly grease up the market that has been waiting for some sign that there really is a surplus. The whites premium, still at well over $100 out through the middle of 2011, certainly doesn’t indicate that there’s a surplus quite yet. But that added boost could be enough to encourage even more Russian production so that they could continue to take advantage of it as long as it lasts.

In the meantime, some reasonably priced transport heading out to the hard-to-reach parts of Central Asia would open up trade for Russia quite nicely. And never forget that China is hungry for imports well out into next year, and likely the year after as well if their crop continues to get hit. There’s just a single border crossing between the two countries, which could get mighty friendly with a sudden inflow of sugar supply.

So for as much as Europe would like to change its sugar market and create long-lasting structural change on the global market, it is in fact Russia who is likely to be the game changer. If and when Brazil and India get theirs acts order, whatever they do will create a shift on a different market than what we have today, and could very well suffer from ‘too little, too late.’