While the beet harvest is in full swing, the sugar price has increased by 20% over the past month. This increase is caused by lower revenues. The question is whether this will also have an effect on next year's sugar beet acreage.
In Germany, an average yield of 68,4 tons per hectare is expected, which is almost 20% less than last year. Although the area has increased slightly (and the sugar levels are also higher), sugar production will decrease: from 5,2 million tons in 2017 to 4,4 million tons in 2018.
Lower revenues in the Netherlands
In the Netherlands, Suiker Unie expects 13,5 tons of sugar per hectare; At least, that was the forecast in October. The sugar content is high and reached a level of 42% in week 17,7. The average sugar content during the first weeks of the campaign was 16,8%. These figures give the Netherlands a production of 1,15 million tons.
Yields are also considerably lower in Belgium. The forecast is that 11% less sugar will be produced throughout Europe compared to the previous campaign. The Brussels sugar consultation shows that the European Commission (EC) assumes 18,6 million tons of sugar, which is clearly less than the 21,1 million tons produced last year.
Also less production outside Europe
Not only are sugar yields lower in the European Union, but this is also the case in Russia and Brazil. There is also more processing of sugar into ethanol, which is caused by high oil prices. Europe also exported more sugar than last year.
Sugar prices rose 20% last month after hitting a 10-year low. For white sugar, €330 tonnes were quoted on the London stock exchange. However, this has only a minor impact on European sales prices, the EC writes.
Area nevertheless (too) large
The situation of an increased area continues to exist since the abolition of the production quota. The area has increased by almost 20% after the abolition and this will probably continue to cause a surplus in the long term.
European producers have been responding to this for some time by announcing that they want to produce less sugar. Cosun announced that it will reduce the allocation for 2019 and also from a poll Boerenbusiness it appears that more than half of voters will grow fewer beets. Approximately 33% of voters are confident and indicate that they will cultivate a constant acreage.
Confidence in Suiker Unie management
The poll also asked whether there is still confidence in the management of Suiker Unie, now that the cooperative can no longer guarantee a profitable beet price and is probably in the red. writes. More than 60% indicate that they still have this confidence, while the rest indicate that they have less confidence in the board.
When asked, Cosun chairman Dirk de Lugt said he was happy with this outcome. "Cosun tries not to be dependent on sugar and we have been working on that strategy for 15 years. This smoothes out sugar price declines. We have been cautious about selling sugar and buyers are also hesitant in a declining market."
The developments in October show that the international sugar market can change quickly. “The perspective can change again,” says De Lugt. "We notice that there is still more demand than supply for LLBs. This keeps the asking price at the same level."