Sugar prices in Europe are under pressure. The first declines are visible on the European market. The supply is increasing, partly due to increased European sugar production. As a result, EU sugar exports have increased and imports have shrunk. But although EU imports decreased compared to last season, sugar supplies from Ukraine increased.
There have been no major price increases on the European sugar market for some time now and the downward trend seems to have gradually begun. The average European white sugar price fell slightly in January to €853 per tonne according to monthly figures published by the European Commission. That's €3 less than a month ago. It is the result of greater European sugar production compared to last season, falling import prices due to pressure on the global sugar price, but also the competitive sugar volumes from Ukraine are a determining factor. The production costs from beet to sugar have also fallen significantly compared to 2022 due to falling energy prices.
The average sugar price in Europe has fallen slightly, but it is the countries with a sugar shortage (region 3, mainly Southern Europe) where the price has fallen significantly by €41 per tonne. In Central/Northern Europe (region 1) the price increased slightly and Western Europe (region 2) remained stable in January. The European Commission's price indicator is slightly behind the times and prices on the European spot market are declining. The average sales price of short-term contracts also continues to decline and confirms that the supply/demand ratio is different than at the beginning of 2022, when more than €1.000 per tonne was paid on the spot market for white sugar.
Futures market under pressure
Sugar prices are also under pressure on the futures markets in London and New York. The growing season in the world's largest sugar producer Brazil is being closely monitored and rainfall has eased concerns about drought there in recent weeks. This idea, together with the area expansion of sugar cane cultivation, should lead to high sugar production again this year. This puts pressure on the global sugar market. A point of attention remains the export capacity, although this is currently a record high. For example, in the first two weeks of February more than double the volume was exported than a year ago. The South American country is not the only major factor on the sugar market. Analysts are currently focusing mainly on India and Thailand, where less sugar is produced than usual. The situation in India appears to be slightly better than previously estimated, but there is no average production. After all, there is still an export ban on sugar in India.
The white sugar contract fell sharply at the end of February and stands at $590 per tonne at the time of writing (Tuesday afternoon). The futures market in New York shows a similar trend. The decrease is mainly due to the expiration of the March contract because a lot was still offered on the last day of the month. The situation in India and Brazil also has an influence. As a result, the quotation breaks through the $2023 per tonne barrier for the first time since December 600.
Imports are shrinking, exports are back to their previous levels
With European beet processing behind them, it is time for sugar producers to take stock. The processing season was characterized by reasonable carrot yields, but with a slightly lower sugar content on average. In addition, the beet harvest was a struggle in several European countries due to the heavy rainfall, which damaged the quality. This did not benefit processing everywhere. It is a certainty that sugar production in Europe will increase compared to a year earlier, but exactly how much remains uncertain. The European Commission estimates production at 15,8 million tons of sugar, but various market agencies such as Czarnikow, but also the International Sugar Organization (ISO), estimate European production at at least 16 million tons.
The fact that sugar production is higher this season is also reflected in the import and export volumes. Imports of 739.000 tonnes until mid-February are higher than the long-term average, but are considerably smaller than the 1,1 million tonnes of 2022/23 in the same period. The purchase from Ukraine has increased and it is the largest supplier to the EU. Until mid-February, 237.000 tons have been imported from Ukraine, 21% more than at the same time last season. Exports are also much higher this season at 408.00 tons until mid-February and are at a comparable level to 2021/22.
Sugar imports from Ukraine have not increased further since December 2023. The EU is by far the most important destination for sugar from Ukraine, according to EC figures. In the first four months of the current 2023/24 season, only a small part of Ukraine's sugar exports appear to have gone to countries outside the EU, including 8.000 tons to Cameroon, 3.000 tons to Israel and Libya and 2.000 tons to Turkey . That was very different for 2022/23, when only a fraction of total exports went to the EU.
7% larger beet area
It will take some time with this wetness before plenty of beets are sown, but sales figures for beet seed show that cultivation will increase to 86.500 hectares this season. Cosun Beet Company reports this. Last year there were about 81.000 hectares. Converted, this means that the beet area in the Netherlands will increase by 7% this season.