News Annual figures
Cosun beet price will only really rise in 2021
Cosun assumes that the beet price will only really rise in 2021. For this year, the group is assuming a price that is comparable to that of the previous harvest year 2019. The cooperative foresees a recovery in the sugar market in 2020. The acreage of sugar beet in the European Union is also falling by 3%.
This is what Albert Markusse, CEO of Cosun, said on Thursday 13 February during an explanation of Cosun's annual figures in Breda. The cooperative company has yesterday (Wednesday) a beet price presented at €39 per net tonne of standard quality beets. This is higher than the beet price for 2018, but still lower than the previous years. The cause is the deep trough in the global sugar market, where prices have only started to climb again recently.
Markusse expects this increase to continue in the coming period, because the harvests in Asia, the European Union and North America are not good. “This creates a shortage in the sugar market of 6 to 11 million tons,” Markusse expressed the opinion of analysts. There is room for further price increases, although Brazil can provide a correction. The Brazilian industry can then switch from bioethanol to cane sugar production.
Better contracts
These developments mean that Suiker Unie will once again be able to conclude better contracts with its customers this year, Markusse expects. Since these are often agreements for a longer period, such as a year, a larger contribution to the beet price can only be expected in 2021.
For the current year, Cosun is cautiously assuming that a beet price will be comparable to 2019. Suiker Unie closed last year with a loss, the second year in a row, albeit lower than in 2018. For this year Suiker Unie expects to be able to write black figures again. The 2019 beet price was boosted in particular by the result of Aviko, which achieved the highest result ever last year. Traditionally, Cosun does not disclose the profit figures of its companies.
Competitive beet price
Cosun is very interested in being able to pay a competitive beet price, emphasizes Dirk de Lugt, chairman of the Cosun cooperative. He sees that in many Member States in the European Union, growers are giving up growing beets. The payout levels for growers there have averaged €21 to €25 per tonne in recent years. “Growers stop because the cultivation is not profitable for them,” notes De Lugt. “We try to maintain the grower's confidence with our prices.”
Markusse sees that in the European Union there has almost been a 'bloodbath' in the sugar industry. In addition to the expected decrease of the European acreage of 3%, 8 sugar factories are also closing their doors. European sugar production has since fallen from 21,7 million in 2017 to 17,3 million tons last year.
The Netherlands is rising, the EU is falling
Cosun sees that the expected restructuring of the European sugar industry, which was expected after the abolition of the sugar quota in 2017, has only now started. “As a result, the European acreage could fall further in the coming years,” says De Lugt. “And that is a development that we obviously do not find annoying.”
Cosun, on the other hand, has decided to increase the Dutch acreage for the upcoming 2020 harvest by 2.500 hectares to 83.500 hectares. The allocation is increased from 100 to 105%. The acreage is increasing to be sure that the desired 1,2 million tons of sugar will arrive, says De Lugt. In the past year, Suiker Unie had a shortage of sugar to serve its regular customers, mainly due to the lower sugar yield.
No import cane sugar
As a result, the company also had to process cane sugar in its factories, producing a total of 91.000 tons of cane sugar. A year earlier that was still 35.000 tons. "But for the coming year we don't want to process cane sugar anymore," says De Lugt resolutely. "Beet sugar is the most efficient production, also in terms of sustainability. We no longer have to import."
Cosun posted a net result of €20 million last year, compared to €1 million in 2018. Remarkably enough, turnover remained completely unchanged from 2,046 at €2018 billion.
Eric the Thrush
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