The sugar price in Europe has already increased sharply last year, but has certainly not yet reached its peak. Significantly more is being imported due to the shortage on the European market. Reports on global sugar production that appear to be good have not shaken the price yet.
The shortage of sugar in Europe is becoming increasingly apparent as the European beet campaign comes to an end. This has already been completed in several countries. It is clear that more sugar must therefore be imported to European countries and this is clearly visible in the import figures. Sugar imports into the EU-27 are already at 650.000 tonnes in the first three months of the 2022/23 season. That is the largest volume since ten years ago, when there was still a production quota in Europe.
Several analysts predict that European sugar imports will exceed 2023 million tons in 22/2. By comparison, more than 1,5 million tons have never been imported in the last five years. The larger sugar imports support the price level that sugar is currently at.
beet acreage
Sugar prices have risen sharply due to lower beet yields, the Russian invasion of Ukraine and all the consequences thereof. Processors also had to deal with fluctuating energy prices and the uncertainty of those markets. Calm has returned to the energy market for the time being, but beet cultivation has been struggling for years, as figures on acreage and yields in recent years indicate. The erratic weather with long periods of drought and higher temperatures seems to be increasingly normal in almost all of Europe. The European beet area has now decreased from 1,6 million hectares to over 1,34 million hectares in six years.
Is a higher beet price enough?
The current sugar prices are a relief and give beet cultivation some more shine, but is that enough to keep the acreage at least the same in the coming years? At the beginning of February, Dirk de Lugt, chairman of the Board of Directors of the Cosun cooperative, when explaining the food group's annual figures, indicated that he expected a significant decrease in the European sugar beet area for the 2023 harvest. He did not mention a percentage or number. The new CAP will cost hectares and other legislation and regulations on crop protection, for example, will not make cultivation any easier. For example, at the end of January it was announced that the use of neonicotinoids was permanently banned in France. For many beet growers, the challenge is even greater after they have suffered a lot from heat and drought in recent years (and specifically last season). Sugar producers expect the area to shrink further in the coming years.
Drought
The coming growing season in France also seems to be off to a false start. On Wednesday, February 22, the French Minister of the Environment announced that as of March 1, the use of water will be limited in several regions, which also includes irrigation. Areas of France are experiencing one of the driest winters on record. France has the largest sugar beet area in Europe.
European sugar producers are trying to do everything they can to retain growers and are therefore already making statements about the beet prices for the coming season, with the price being higher than this season. The French sugar producers Tereos and Cristal Union have done this before. The Spanish sugar cooperative ACOR also sets a minimum price of €71 per tonne of beets for the next season.
Global market
Europe is facing a sugar shortage this year, but worldwide production is not disappointing. Global supplies are not low or worrying and in the coming year Brazil, the largest sugar producer, appears to be fully committed to growing sugar cane. The US also recorded high sugar production, as did several Asian countries. India, the largest sugar producer and the largest exporter after Brazil, also expects above-average sugar production. However, India has set an export quota on sugar of up to 5 million tons. This can be increased later in the processing season, but it remains an uncertain player on the global sugar market.
The sugar price has been fairly stable since February and increased slightly on the European futures market. On the ICE in America, the raw sugar contract was at its highest point in almost six years at the end of January. That is slightly lower at the time of writing at $21,20 cents per pound. The European quotation is currently (Thursday, February 23) $568 per tonne of white sugar. By the way, sugar prices on the spot markets are a lot higher in Europe. In November was the average sugar price for white sugar in Europe still at €622 per tonne. In December this became €655 per tonne. The differences per region are large, with the average price in Southern Europe being €845 per tonne and in Western Europe at €624 per tonne.