Sugar prices continue to rise globally due to concerns about tighter production and supplies. These prices ultimately taste sweet to beet growers, but this has not yet led to higher enthusiasm for sugar beet cultivation. In addition to grain and dairy, Eastern European countries also ban the import of sugar from Ukraine. That while Ukraine has delivered a lot this year to the demanding Europe.
Although the growing season of the 2023 harvest has formally started, sugar prices continue to rise worldwide. Europe has been struggling with a sugar shortage since 2022 due to very low production due to the drought. Production is also disappointing in other countries where a lot of sugar is produced. This is reflected in increasing concerns on the sugar market, causing prices on the futures markets in London and New York to rise sharply again since the beginning of this month. At the moment, it is India - the wild card on the global sugar market - that is heating up the sugar market by almost certainly canceling sugar exports. Sugar production has been reduced from 38 to 32,5 million tons of sugar, meaning that the Indian government sees no room for exports to protect its own internal consumption.
Sugar rating highest in more than 6 years
The futures market in London rose in recent weeks from $630 to $700 per tonne, but has now fallen slightly to $670. The decline is explained by the fact that the market was somewhat inflated after the rapid rise and is now recovering from it. The rising oil price also pushes the price down slightly. However, since the beginning of April, the price has risen by 6,5% and is at the highest level in six years. On the European spot markets, sugar prices are considerably higher, up to €900 per tonne. Or even higher, depending on each region whether there is a sugar surplus or shortage.
The New York raw sugar contract is up 7,5% since early April through today and now stands at $24,29 per pound. The quotes are supported by concerns about lower production and tight inventories. In Brazil, the world's largest sugar exporter, the new processing season is just around the corner. A good yield is expected, the second highest ever, but according to analysts, this production has not alleviated the global shortage.
Small decline in beet cultivation
In view of current market developments, it is obvious that there will be greater interest among farmers in the European Union for the cultivation of sugar beet. The payout prices from last season have also increased and seem to be a preview of next season. Nothing could be further from the truth, because the beet area in Europe is expected to shrink. Growers are not interested in the crop because of the drought and heat they have had to deal with in recent years - and especially last season. The balance of other crops also seems better. The disappearance of crop protection products puts pressure on cultivation, such as the ban on neonicotinoids in France. Although grain has now fallen sharply, the contract prices for potatoes can be called lucrative compared to previous seasons.
It is difficult to predict what will be sown in the EU. It is certain that the area will decrease again by a few percent. The European Commission assumes a 3 to 4% decrease. The hectares are decreasing mainly in France and Southern Europe, but also in Poland. The French Minister of Agriculture reported last week that the acreage fell by 5% this year to 382.000 hectares. In the Netherlands, Cosun Beet Company maintains an equivalent area until a minimal increase, the company previously reported Boerenbusiness. No figures are known so far for other European countries. Sugar company British Sugar is optimistic about the coming season. The company announced last week that the area will grow by 13% in the coming campaign, almost passing the 100.000 hectare mark.
Import ban from Ukraine
Last weekend, the Polish government announced that it would temporarily ban the import of grain, milk and sugar from Ukraine. They do this to protect their own farmers and their own market against the much cheaper agricultural products from the country. Hungary and Bulgaria have also introduced similar import bans. In Romania, farmers also frequently protest. However, it is contrary to the rules and laws of the European Union.
This season there is a shortage of sugar in Europe, which is estimated by the European Commission at around 1,5 million tons. Until now, Ukraine has supplied a large amount of sugar to Europe, through and through the above-mentioned countries. To date, around 2022 tonnes of sugar have been imported by the EU from Ukraine in the 23/234.000 season. Romania, Hungary, Bulgaria and Poland together account for more than 60% of this volume. Normally only 20.000 to 40.000 tons of sugar enter Europe from Ukraine in a whole year.