Sugar production in the European Union (EU) this year is considerably lower than in previous years. For 2020-2021, a production of 16 million tons of raw sugar is expected. In the meantime, the sugar price is climbing very cautiously.
If the estimate of 16 million tonnes comes true, EU sugar production this marketing year will be more than 6% lower than in 2019-2020 and more than 12% below the 2018-2019 level. Compared to an earlier forecast, the yield has been adjusted downwards by more than 1,5 million tons, according to a report from the United States Department of Agriculture (USDA). The reason is the lower average sugar beet yield predicted for the EU.
Impact situation France
The latest MARS bulletin from the European Commission (from September) assumes a sugar beet yield in the EU of an average of 73 tonnes per hectare. That is 2,1% below the 5-year average. The situation in France, the largest beet producer in the EU, has a particularly significant impact. The harvest would be according to that the latest figures of the French Ministry of Agriculture are 20% below last season's level. Countries such as Poland, Romania and Belgium are also making significant losses this year.
Apart from a slight decline in area in the EU, beet growers in many countries have suffered from the drought. The yellowing virus also causes major problems. Reason for the French parliament to agree to one temporary exemption for neonicotinoids. It remains to be seen whether the Netherlands can also count on a derogation for the use of coated seed very questionable.
Less bioethanol
Total beet sugar production in the EU for 2020-2021, including production for industrial use, is estimated at 17,8 million tonnes. That is 1,2 million tons less than last season. A decline in bioethanol production in particular is expected, because demand has fallen sharply since the outbreak of the coronavirus.
Sugar consumption in the EU last season amounted to 18,3 million tons. That is a decrease of 1,6% compared to the consumption level before the corona crisis. Consumption is expected to remain at current levels, because the consequences of the crisis are still being felt.
Consequences of Brexit for the sugar trade
As a result of lower sugar production in 2020-2021, higher sugar imports are also taken into account. This is estimated at 3 million tons, an increase of no less than 43%. On the other hand, there is a lower export of 1 million tons (-17%). A major uncertain factor in these forecasts is Brexit. Any import tariffs between the EU-27 and the United Kingdom could significantly affect trade.
The total sugar stock in the EU is expected to decline further in 2020-2021. By the end of 2019-2020, the stock will already be below 1 million tonnes. This may be one of the reasons for the sugar market to move slightly higher in recent weeks. The Liffe closing price in London is currently €329 per tonne. This is far from the level before the corona crisis, when a peak of €12 per tonne was reached on February 413, but it does offer a bright spot in uncertain times.