Trade in member delivery notes (LLBs) for sugar beet has stabilized after a period of strong demand growth and rising prices. In the meantime, there is clearly a brake on trade. Insiders partly blame the new cap. Growers puzzle with the cultivation plan and sugar beet sometimes has to make way for other crops.
For a long time, the trade in LLBs was at a low level and with it the price. This was the result of a disappointing beet price for the 2021 crop year. After early November clearly When it became clear that growers can expect a significantly higher price for 2022, interest in the cultivation - and therefore delivery certificates - has also increased rapidly.
Price to €40
While the price has often fluctuated between €30 and €35 per LLB in recent years, it was now around €23 until the autumn, say intermediaries. Recently, the price rose to €40 due to rapidly increasing demand. That is a significant improvement, but not spectacular. In the recent past, the price level has reached heights of up to €55, although the number of LLBs and the region code are very important for the final price.
Beet growers on clay soil have now largely completed their construction plans and have given the beets a place. This concerns companies in the southwest, Flevoland and the north of the Netherlands. Arable farmers in the east and southeast in particular are still struggling with their acreage and this has an impact on the LLB market. These – often larger than average – companies work with a lot of loose rental land and sometimes rent additional LLBs for one growing season.
Cap inhibits demand
The reason for this stagnation is twofold. On the one hand, rental land is not easily available. Livestock farmers themselves use more hectares for grassland or forage crops as a result of the disappearing derogation and the need to grow more concentrates themselves. In addition, there is the CAP, which affects both tenant and landlord. The late harvest of sugar beets has an impact on the potential reward within the CAP eco scheme. Delivering early or not growing beets at all can result in going from bronze to gold, which yields €140 per hectare. It is a decision for every entrepreneur where the financial benefit lies.
The cultivation of protein crops such as field beans or alfalfa is another important point that can cost hectares of sugar beet area. The possibility of sowing a green manure after harvest also counts in the assessment pattern. All these reasons mean that it is still a matter of puzzling how the construction plan will work out, especially in the case of a lot of rental land. Insiders therefore expect a peak in the demand and supply of LLBs early next year.
Rentals are increasing
Most LLBs are traded through the beet agents of Cosun Beet Company. In addition, a number of specialized intermediaries are active in this area, also for facilitating rentals. In recent years, Cosun has adopted a slightly more lenient attitude towards this 'beet tourism', as they themselves call it. The grower is immediately paid the beet money to his grower number, while the LLBs remain under the owner's membership number. The grower also completes the Unitip registration himself. This ensures that landlord and tenant do not have to know each other and supply and demand can be linked more easily.
LLBs are generally rented for a symbolic amount. It allows the LLB owner to grow another crop on the vacated area, but at the same time remains a member of the cooperative. This has therefore become a relatively popular option, especially for companies with an intensive construction plan.