COMMENTS ON CUBAN SUGAR TRADE AND THE SOVIET SUGAR BEET INDUSTRY (S-1163)

Created: 2/10/1964

OCR scan of the original document, errors are possible

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op Cuban Sugar Trade sad too 5Z

* , whan trade between Cuba and tho Soviet 'Union first began to socuoo major projxn-tiono, tbo USSR purebred Bwtt prevailing vorldprioeo, ver> theeeo* to pay ft fired priceent* por pound and this price was maintainedI,and the first five months- ThroughI2 period, tho Soviet pricorealun of about one cent per pound oince vorlduring tbeae yeare averagedents par pound.

2. rferegreph g. (bj. Shortly after returning to Havana from his3 visit to Hoacov, Fidel Castro announced thatR had agreed to Increase its buying price for Cuban sogerents per pound. The evidence indicates that the eev price probably want into effect about the first of According to the announce-aenta concerning the May ogreeaent, tbe nov pries policy was Intended to bring Soviet prices "Into line with world prices/ however, the agreedcoents per pound vas only about half the vorld price prevailing at the tine end It ramaiued substantially below tho vorld prloo for the root of ths yonr.

3- .rfirsfiranb ents per pound vas paid during tho loot half3 end is also tbo price agreed to forVO period It appears that it is also the price which the Soviets will vary during loOt.

Porasraph 3. As Indicated above, world sugar prices since Inst May lave retained shove the USSR buying price. During tha last seven Booths ofthe Vorld price averagedents perrices on the vorld futures snu-fcst until recently had indicatedrices vould rcnain close to thieecent break In,tbe aarket ha*utureo and 'da of this writingwyittleoat* per pound. It Xo too soon to tell vbefcher prices vill reooin at this nev level or not.

5. In ay-naral, the prico outlookas appeared to be quite favorable for eJcpdrting eountrlest It is expected that world eonsujap-tlon of sugar vill be larger than production; this situation vill loadurther reduction of stocks and probably vill provide continued support for high prices. owever, this situation Is expected to change gradually. Many countries that oro Important Mgar producers are planning substantial increases in their production during the next soveral years. Startingroduction should begin to

increase relative to cansuaptlon and prices will tend to weaken. If Cuba Is able to fulfill Its pree eat production plans. It will odd substantially to this general trend. Cuba, currently plans to produceillion tona annually Shis would permit tne export ofillion tons to the free World, about three ticca tne volyra Cube, probably vill export to thla ares*

*** BfiSfiSSfe^ Soviet sugar beet factories generally are in use for"caiXy"assort period of eereral aonths eachyear, tbe auger beets as quickly as potis advantageousobeeW.arfi,.Bvo^ tba ereoter tbe loss.

n operation, tbethe beets will beft. Therefore, It la advantageous for the Soviets to have an adequate nicntcr of plants to Insure tlnely pro-ceOslna of the beets. *Rrls Bajr in part have accounted for tba planned Increase In plant capacity whioh by the ead3 would be auffieleat forons of beets dally. The Soviets are also refining the Imported raw cane sugar at these planta and all future Iaports could undoubtedly be handled by these plants etnae the raw cano eager Is not refined during tho ease period of the year as rav beet sugar.

7- For ease years the Soviets have been increasing their sugar beet acreage not only for the production of sugar, but also for livestock feed. Stale ddal ace of sugar beet output provides the Sovietsedge Against .any disruption of planned sugar Iaports froalthough it diverted for thla purpose this might result ln some loss la Seat production. tt has beea disclosed that the Soviets Intended3 to divert into livestock feedillion tons of beets, originally to be used for processing Into sugar. The aaramt actually diverted nay not have reached thin figure. It io not believed that tbe Soviets intend to alter their goalo for beat Bugw prediction because of anticipated increases ln cane sugar Imports fron Cuba as specified in the long Term Trade If the reauiressnts for the processing of beets Into sugar vera reduced the pleats could be operatedower level. In view of current practice of using beets for livestock feed. It is not believed that tba Soviets would reduce sugar beet acreage, even if they felt ftsd^red.e would bo no shortfall "in the future plannedane sugar from Cuba.

An annual production ofilllon tons would probably beas follows: illion tons to theillion to other Coasrualst Bloc countries {principally Coaminlstillion tons to the Pree World, endillion tona for domestio consumption.

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