USDA revises export estimate
Sugar exports on the rise: prices must fall
Sugar exports in the European Union will rise faster than previously thought. This export estimate has been adjusted following the expiry of the sugar quota. However, the increase in exports also has a negative side: sugar prices will fall.
The United States Department of Agriculture (USDA) raised its export estimate for the European sugar market to 2.5 million tons. That is the highest expectation in 8 years. This new export estimate is 300.000 tons above USDA's earlier expectations.
However, this figure is still lower than the expectations of other parties. For example, the International Sugar Organization expects that 2.8 million tons of sugar will be exported from the European Union (EU).
Last year, European sugar exports still amounted to 1.5 million tons. The sharp increase in exports is, of course, related to the expiration of the sugar quota on Sunday, October 1, 2017.
Prices can only go down
The higher export figures mean that the European Union will probably become the fourth largest sugar exporter in the world, after Brazil, Thailand and Australia. On the other hand, European sugar prices must fall to be competitive on the global market, the USDA report said.
"The quality sugar in Europe could generate a price premium, but this must be limited if the EU is to achieve its export ambitions," the USDA reports. However, European sugar prices have shown themselves to be quite stable recently, despite the poor prospects for the market.
Future vision exaggerated?
Credit Suisse, a Swiss financial services company, reported last month that the sugar price in Europe was above €450 per tonne. According to the service provider, this is a fairly modest decrease. “This is not even close to a market collapse that some have predicted,” Credit Suisse said.
The USDA disagrees. Without a guaranteed sugar beet price, which puts the floor under costs, the sugar price in the EU can only follow world market prices.
In addition, European sugar processors are also busy competing to gain market share in the post-sugar quota period. This could put further downward pressure on prices, the US Department of Agriculture said.
On the stock exchange in London, white sugar traded at $6 per ton on Friday, October 378,40, converted to euros, that is €323 per ton.
Kimberly Baker
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