EU price under pressure
Sugar market is doing year-end sales
During the past 3 weeks, the futures market prices for sugar have fallen sharply. Higher production figures in some key growing regions, including the European Union (EU), are causing confidence in the commodity to decline.
On Friday afternoon, December 15, New York's number 11 raw sugar contract traded at a price level of $13,89 cents per pound. Then it dropped a little further. That price applies to the March contract. The May and July contracts are trading at a lower price level. Converted, for raw sugar in New York €260 per tonne is paid. On November 24, that was still €289 per tonne, a temporary high. In less than a month, the price has fallen by 10%, writes Top Farmer.
10
procent
The white sugar contract on the Liffe in London is also not going to last. There, the March contract ended week 50 at $363,80 per tonne, or €308,40. That is a minus of 8,6% since the end of November.
More sugar production
One of the reasons the futures markets have started a 'sell' is to increase global production figures. The European Union (EU) expects more sugar production, just like Thailand and India. The world stock of white sugar is estimated by analysts at 2017 million tons for the 2018/6 season.
Brazilian influence
Devaluation of the Brazilian real against the US dollar is putting the country more firmly on the sugar market. This benefits exports. Sugar production in Brazil's largest sugar-producing region is below last year's level. At least that was the case in November. The sugar cane harvest runs until March and is currently hampered by rainfall.
A sharp drop in sugar prices makes the raw material more attractive to use for the production of ethanol, as a substitute for maize. As a result, less Brazilian sugar is available for consumption, which in turn benefits the market.
La niña
Sugar cane producer Australia is also struggling with difficult harvesting conditions. Sugar cane harvesting has been completed, but by no means all crops are off the land. The weather extremes are the result of the La Niña phenomenon. Cooling seawater in the Pacific Ocean will cause more rain in Australia and Asia. In South America it is actually drier than normal.
Mackay Sugar, the second largest sugar cane processor in Australia, stopped processing in early December. Due to the heavy rainfall, the required amount of sugar cane, which is needed to keep the factories running, cannot be supplied. The total decrease in production, compared to the previous season, amounts to 1 tons and amounts to 250.000 million tons of sugar cane. This reduction is partly compensated by higher sugar percentages in the sugar cane.
Press Europe
The EU Sugar Market Observatory expects the EU to be able to export 2017 million tons of refined sugar in the 2018/3 season. This means a doubling of expectations for the current season. The reason given for this is that sugar exporters in European countries have invested in logistics and are able to seize opportunities on the world market earlier. Under pressure from the world sugar price, the EU sugar price is also falling further, according to the Brussels market office. It currently moves around €500 per tonne.
The EU commission expects a stabilization of the price around €400 per tonne in the medium term. Under pressure from health organizations and increasing use of isoglucose, the committee expects consumption to fall to 17,5 million tons by 2030.
Niels van der Boom
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