The sugar beet harvest in Europe is in full swing. Not only in the Netherlands, but also elsewhere, the results leave something to be desired in various places. However, it is a drop in the ocean for the recovery of the global sugar market.
The price of sugar has been under pressure worldwide since the outbreak of the corona crisis. The recovery seen in May is fragile. The price still fluctuates at a level far below the pre-crisis level. The Liffe closing price in London stood at €320 per tonne at the end of September. For comparison: a high of €12 per tonne was reached on February 413.
Harvest forecasts Europe
Anyone who looks purely at the European market can conclude that there should be sufficient reason for a price revival. The beet harvest is in full swing and the results are not good in many places, to say the least. Drought, the yellowing virus and leaf diseases are the biggest culprits. This in combination with an already... smaller area in Europe: -2% compared to 2019 (where the Netherlands incidentally exception forms).
The European Union's September MARS bulletin assumes an average beet yield in the EU of 73 tonnes per hectare. That is 2,1% below the 5-year average. For the Netherlands, a small plus (0,5%) is still expected, which will bring the yield to an average of 83,5 tons per hectare. Countries such as France, Poland and Belgium are making significant losses according to yield forecasts. The situation in the United Kingdom is also being examined. The expected 75,8 tons per hectare there means an increase of 7,7% compared to the past 5 years.
Varying quality in the Netherlands
In the Netherlands, the beet campaign has now been underway for over a week. Cosun Beet Company reports that in the first week the sugar content averaged 16%, which is in line with the first week of the campaign in previous years. The average tare percentage is relatively low so far at 6,9% thanks to the dry harvesting conditions last week. According to Cosun, the differences between plots when it comes to beet quality are striking. This can be traced back to the special growing season with challenging conditions.
Final sugar production in the EU and Great Britain is estimated by analysts at 16,1 million tons this year, compared to 17 million tons in 2019. In particular situation in France, the largest sugar beet producer in Europe, ensures that European sugar production is estimated to be significantly lower. There, yield forecasts vary from 10 to even 15% below the 5-year average.
Situation India and Brazil
However, in the international playing field in which the sugar market finds itself, the European effect is minimal. Superpowers India and Brazil largely determine the mood in the market. India, the world's number 2 sugar exporter, is still struggling with a huge sugar mountain and is pumping out cheap, subsidized cane sugar into the world market.
The world's largest sugar exporter Brazil plays an even more dominant role. Sugar production in the country is significantly higher this year. The excellent sugar cane harvest was intended for the production of sugar rather than for ethanol. This has everything to do with the fact that the biofuel market collapsed during the outbreak of the corona crisis. Although the price of ethanol is now recovering, and production is also shifting slightly in that direction, sugar production in Brazil is still far above average.
45% higher sugar production
In the first half of September this was a plus of 45% compared to last year. This is evident from figures from Unica, the Brazilian trade association of sugar cane processors. This means that sugar production in Brazil this year is already 9 million tons ahead of last year. With such volumes, the contraction of sugar production in Europe is relative.
This is reflected in the import and export figures of the European Union. Until mid-September, the EU imported more than 1,7 million tons of sugar (raw and white), which is lower than the 5-year average (2,4 million tons), but still significant given the lower sugar consumption since the corona crisis. . Exports will remain at 764.000 tons until mid-September, compared to an average of 1,4 million tons over the past 5 years.
Shrinking world supply
Nevertheless, there are bright spots for the global sugar market. The ISO (International Sugar Organization) still expects a global sugar shortage of 9,2 million tons at the end of the 2020/2021 season. After the consumption contraction due to the lockdown, sugar consumption is expected to grow by more than 4 million tons. A number that global production cannot keep up with. According to ISO, the global final stock will therefore shrink from 96,3 to 95,7 million tons.