More than a million tons more sugar is expected to be produced in the European Union this season. However, this is not noticeable in the pricing. The average price for white sugar recently reached its highest level since the abolition of the European sugar quota.
In the Netherlands, growers are currently still busy getting their sugar beets out of the ground. According to Cosun Beet Company, 28% still had to be harvested at the beginning of this week. The beet campaign runs smoothly and the quality is good. This can also be deduced from the relatively low tare content (so far on average 9,5%) and the high sugar percentage, which is still 17,1%.
However, the total yield this year is most likely slightly below average. According to the provisional harvest estimate from Statistics Netherlands, there will be 2,3% less sugar beets harvested in 2020. Cosun still assumes a yield of 13,6 tons per hectare. With the slightly shrunk area (80.720 hectares), this means a sugar production of almost 1,1 million tons of sugar.
Europe produces 8% more
In contrast to the Netherlands, an increase in sugar production can be seen throughout Europe. According to the most recent figures from the European Commission, 15,7 million tons of sugar will be produced this season. That is more than 8% more than in 2020-2021, when production was 14,5 million tons. Imports also increase from 2,2 million tons to 2,5 million tons. Consumption and exports of EU sugar are increasing much less rapidly, causing the final stock to grow to 1,2 million tonnes according to estimates.
However, the available volume has no impact on the average sugar price in Europe. In September, this exceeded €2017 per tonne for the first time since the abolition of the European sugar quota in 400, namely €408 per tonne. This means that sugar is above the reference price of €404 per tonne set by the EU for the first time in four years. Below this level, the European Commission can intervene with measures to regulate the market. Despite the particularly poor pricing, this has not happened in recent years.
A worldwide shortage
The sugar market has now shaken off the crisis years. Because although the yield in Europe is estimated to be slightly higher, worldwide it is expected that there will be a shortage of sugar this year. The International Sugar Organization (ISO) expects the global sugar supply to shrink by 3,8 million tonnes, bringing it to 2021 million tonnes by the end of 2022-95,3.
Various developments underlie this. For example, the world's largest sugar exporter, Brazil, will pump less sugar into the world this season due to disappointing harvests. Also from India, number 2 worldwide less sugar expected. Although that gap will soon be filled by the Thai sugar industry, which is expected to have more sugar available.
Impact dollar-real rate
Another important driver for international sugar prices is the high demand for ethanol, which means that less sugar cane is destined for sugar in favor of enthanol production. Finally, the relatively low value of the US dollar compared to the Brazilian real has a dampening effect on sugar sales. This is noticeable on the Liffe in London. The closing price rose again this week to a level of above €460 per tonne.