Sugar prices in Europe have still not reached their peak and rose again last month. Despite the high prices, cultivation in Europe is not behind the heated market. In addition, the start of the new growing season leaves much to be desired.
Sugar prices on the futures market in London have been more stable than before in recent weeks. The new white sugar floor appears to be at least $700 per tonne. If we look at the European spot market, we see even higher prices for white sugar. In April, the average price in Europe stood at €812 per tonne, €366 higher, or an increase of 82% compared to April 2022. Prices are highest in Southern European countries with an average of €892 and in Western Europe the highest lowest' with €800. This is evident from the May edition of the European Commission's sugar market report.
Global sugar market
The situation on the global sugar market is no different than in Europe. Despite a smooth, good sugar cane harvest in Brazil, global sugar prices currently remain stable and several major sugar producers and analysts see little impetus for a price drop. A larger volume of sugar cane than other years in Brazil is used for bioethanol instead of sugar. Higher taxes on fuel create more demand for the biofuel from the world's largest sugar exporter. As a result, despite the good and smooth sugar cane harvest, less sugar is available for export. In India, the other major sugar exporter in the world, exports are stuck at 5,5 million tons due to the export limit. Last year a record 13 million tons of sugar was exported.
Due to the export limit and disappointing sugar production in Asian countries such as Pakistan and Thailand, export and import flows have also been disrupted and stocks are shrinking. In the US Department of Agriculture's (USDA) biannual sugar report, global sugar stocks are expected to fall 2023% to 24 million tonnes in the 15,2/33,4 season.
Export and import turned upside down
With a sugar production of only 15 million tons due to the meager 2022 beet harvest, considerably more sugar is imported to Europe and less is exported. In the 2022/23 season, sugar imports to Europe (including the United Kingdom) already amount to 1,7 million tons. In recent years this has been just under the 1 million mark. This is evident from figures from the European Commission. Brazil has the largest share of total European imports with 39%. Ukraine and the group of EPA/EBA countries (developing countries that are allowed to export part of their sugar production duty-free) both supply 17% of the total. Ukraine already supplied a total of almost 300.000 tons of sugar to the EU, compared to only 9.000 tons last year.
Sugar exports are shrinking considerably. In October and November of 2022, the volumes crossing the European border were still in line with other years. This has now dropped to as much as 70%. In March, 29 tons were exported compared to 65 tons in the past two years. In April, exports themselves amounted to 2 tons of sugar. Despite higher imports and lower exports, European sugar stocks are 19 tons lower than last year and amount to 600.000 million tons.
European sugar production will also be lower than the 5-year average next season. Both the yield and the area have something to do with this. Growers in Europe did not sow after the heated sugar market for various reasons. For example, other crops are preferred because of better yields in times of drought and heat. The shrinking crop protection package also plays a role in the already challenging cultivation, which was a reason, especially for French growers, to grow fewer beets. The price of sugar beets could once again be high given the current sugar market and the lower production this season. It remains to be seen how the market develops, but according to analysts there are few reasons for price reductions.
Dutch beet area the same
Also in the Netherlands, no more beets were sown than last year. Arno Huijsmans, Director of Agricultural Affairs at Cosun Beet Company, indicates that the Dutch sugar beet area remains approximately the same as last year. In 2022, 83.500 hectares of sugar beets were sown. Huijsmans indicates that expansion of the area was possible due to a small increase in sugar production, but growers have not sown more despite the higher market prices. The new CAP also stands in the way of expansion.
The average sowing date this year is April 26, which is almost a month later than the average of the last 5 years. The last time sowing was done this late was in 2001. Model-wise, this later sowing date costs approximately 750 kg of sugar per hectare in potential growth. Despite sowing later, good yields can still be achieved, but you simply miss growing days to achieve a really good yield, Huijsmans explains.
European beet seed
In other European countries, beet growth is also lagging behind. The May edition of the EC's JRC-Mars Bulletin report shows that the average emergence has been good, but that the sowing dates vary and are later than in other years. In France, Germany and Poland, sowing of sugar beets was delayed due to precipitation and below-average temperatures. At the end of April, sowing accelerated due to a dry and sunny period. In France, therefore, sowing was on average 2 weeks behind the long-term average. Some of the sugar beets were sown early in March and this now results in large differences in growth stages. In Eastern Europe, sowing was also delayed due to precipitation and lower temperatures, but the seeds are now also in the ground there.