EU to become net-exporter of sugar after beet industry shake-up

26.04.2017

The European Union will regain its place as a net-sugar exporter for the first time in over a decade, after the removal of limits on production this year, US officials said.

The 2017-18 marketing year will see the EU sugar market throw off the 50-year old shackles of production and export limits.

"As a consequence, the EU sweetener market enters a new era with likely increased market volatility for the next few years until the different EU industries find new market equilibrium," said the US Department of Agriculture's bureau in Brussels.

And the bureau warned that further volatility could come to the market, with the exit of the United Kingdom from the bloc in two years' time.

Surging production

EU sugar production is expected to jump by 2.1m tonnes in 2017-18, to a record 18.6m tonnes, the bureau said.

"The beet processors are aiming at lowering their cost of production for beet sugar by optimizing beet and sugar processing capacity without significant additional investments."

"They want to produce cheap sugar as a in the coming EU sweetener market struggle, as well as regain their former sugar exporter status after the WTO sugar export ceiling is lifted with the end of the sugar quota system."

And sugar consumption in the block is expected to ease slightly, as a deregulated isoglucose industry wins market share.

Imports to fall, exports rise

This increase in production will hit imports, as well as the EU's refining industry, which processing imported raw cane sugar, as the EU becomes a net-sugar exporter for the first time in over a decade.

Sugar imports are expected to fall to 2.0m tonnes in the coming season, while exports rise by 700,000 tonnes to 2.2m tonnes.

In order to achieve these rising exports, the bureau forecast domestic EU sugar prices to fall to a level in line with world sugar markets.

Brexit threat

The bureau warned that after the end of the EU sugar quota system, "another market shock is only two years away, in theory, as the British Prime Minister, at the end of March 2017, started the clock for the two-year separation negotiation period with the EU".

Brexit would represent a "major market reshuffling," given that the UK is the largest importer of EU sugar.

In addition, the bureau noted the potential for an impact to the EU's agricultural programme, to which the UK is the second largest contributor.


agrimoney

Readers choice: TOP-5 articles of the month by UkrAgroConsult