After a strong end to the year, the international sugar market is still under pressure in early 2023. What is playing tricks on the EU is a strong euro exchange rate. There is also greater sugar production at the world level, which is causing the price to fall. European beet growers are happy with the cultivation for this year. The prices offered have risen sharply.
The London quotation for white sugar on the Liffe futures market suffered a significant downgrade in mid-September when the September contract changed to the November contract. The price rose slightly again at the end of December, before falling again in the first month of this year. The price level fluctuates around €500 per tonne and is slightly above that. That is still well above the five-year average, which is €386,85 per tonne.
Physical market is holding up
The physical sugar market in the EU has a built-in delaying effect compared to the futures market. Asking prices are still considerable, especially in Southern Europe. In November the average sales price was €622 per tonne. That is about €120 higher than what the futures market was at at the time. Depending on the delivery region, the price varies from €513 to €815 per ton, depending on whether there is a shortage or surplus. The physical sales price in November was still €200 above the level of a year earlier.
For the current season (2022/23), the European Sugar Commission estimates 15,02 million tonnes of sugar in the EU-27 from 1,348 million hectares. A season earlier, 16,28 million tons of sugar were harvested from 1,48 million hectares.
Pressure on global market
The notes from the latest Brussels sugar consultation show that the pressure on price formation will continue for the time being, or so it is expected. In Thailand, the cane sugar harvest is more favorable than previously thought. In addition, Brazil processes less cane sugar into ethanol, making more available for consumption. India – the wild card on the sugar market – will not increase its export level for the time being. On the European continent, Ukraine has sold considerably more sugar this season than previously thought.
Sugar beet cultivation is experiencing difficulties, especially in European countries where there is great pressure on agricultural land. The Netherlands and Belgium are two countries where this is visible. However, the presented beet prices – especially in the Netherlands – ensure that growers view the crop differently. For price levels Many arable farmers want to grow beets between €40 and €50 or more. The expectations outlined in the contract prices for the coming season are good. European arable farmers with an extensive cropping plan can therefore maintain reasonable cultivation.
However, the area in 2023/24 is expected to remain relatively low in the EU. In the CAP, arable farmers are quickly punished if beets are harvested late. This certainly plays a role in the Netherlands. Much also depends on the grain/wheat price, which is still relatively high but also offers room for alternatives.
Beet prices remain good?
Royal Cosun will announce its final beet price for the 2022 harvest year at the beginning of February. It has been known for some time that it will be considerably higher (above €50). Cosun Beet Company sells most of its sugar in the last months of the year and a small part in the new year. If the company has now applied that strategy, it will probably pay off. It would mean that the company traded at a high point in the market. This assures beet growers that the price for next season is on a solid basis.