A shortage of sugar still has to be taken into account. This is partly because India continues to actively focus on the production of sugar cane for the ethanol industry. They also see the danger of a sugar shortage in the United Kingdom. That is why the contract prices for 2022 have been increased significantly. And the Liffe listing, which remains at a high level.
Cosun Beet Company reported in the last week of the year that approximately 450 hectares of sugar beet still had to be cleared in the Netherlands. These are partly plots with frost damage - which are delivered under the emergency regulations – but this mainly concerns damage-free plots on light soils. The sugar content has dropped to 16,7%, partly due to precipitation. The latter also makes harvesting more difficult. "But in view of storage losses, it is a normal decline," says Cosun. The tare percentage is around 12,5%. The processor joined in the start of the campaign in September an average yield of 81 tons per hectare. The sugar yield was estimated at 13,6 tons per hectare, slightly less than the five-year average.
British increase contract prices
A larger area of sugar beet (and therefore a higher yield) is also something they are working hard on in the United Kingdom. The method to achieve this appears to be a significant increase in the sugar beet price for 2022. Growers on a one-year contract will receive £27 per tonne and those on a three-year contract will see increases of up to £25 per tonne. The National Farmers Union appears to have had the upper hand in the negotiations. There is a catch: growers must promise to grow sugar beets for another year after this.
But why is it so important for the UK to retain its growers? After a wet autumn and disappointing yields, the National Farmers Union saw that many sugar beet growers were seriously considering whether or not to extend their contracts. This led to clenching of the buttocks at the British Sugar organization. The global sugar supply is not very large. The International Sugar Organization (ISO) expects global supplies to shrink by 3,8 million tonnes, leaving them at just 2021 million tonnes by the end of the 2022/95,3 season.
Produce ethanol
Growers who are quitting are not the only reason for the limited sugar supply. Another reason for an expected shortage of sugar is the fact that major players in the international dairy market are increasingly focusing on the production of sugar ethanol. To divert surplus sugarcane supplies, India is encouraging sugar producers to use the product for ethanol production. This also contributes to the Indian government's target of reducing CO2 emissions by one billion tonnes by 2030.
It is therefore not surprising that India will continue with the 'aggressive blending program' in 2022. This is also reflected in the annual increase of 3% to 5% in ethanol prices, the continued government support for capacity expansion and the strong demand for ethanol. Rumor has it that oil companies have already contracted more than 3,69 billion liters of ethanol in the current marketing season (which runs from December to November). Nearly one billion liters will be added in the coming weeks. The Indian government also reports that it plans to blend 2025% ethanol in 20, compared to the current 10%.
High prices
This certainly does not mean that a sugar shortage has disappeared. The quotation for sugar on the Liffe closed on Tuesday 4 January at €438,54 per tonne. That is an increase of about 2% compared to a month ago and a plus of about 25% compared to the same period last year. At the beginning of last year, the quotation on the Liffe stood at €350,82 per tonne. If the largest producing countries indeed start to focus more on ethanol instead of regular sugar, there is a good chance that the Liffe quotation will remain at this high level.