The European Union's farm chief asked her legal services on Monday to look into the possibility of allowing exporters to exceed its sugar export ceiling without breaching international trade rules. Under World Trade Organisation (WTO) agreements, the European Union's sugar export is limited to 1.3 million tonnes annually, a level that has been topped in the past weeks, forcing exporters to store surpluses following high crop yields.
"I recognise that we are facing a very unusual situation in the sugar market this year," EU Commissioner for Agriculture Marianne Fischer Boel, told the 27-nation bloc's agriculture ministers meeting in Brussels. Fischer Boel said that due to global under-supply, world market prices have reached record levels, while beet producers have seen high yields, leading to an overproduction of out-of-quota sugar.
Front-month white sugar futures in London rose on Monday above $731 per tonne, within sight of a record high of $748.00, fuelled by tight global supply and steady consumer demand. The EU's executive arm - which oversees the bloc's farm policy - raised the export ceiling last for 2009/10 to 1.35 million from 650,000 tonnes previously, citing potential storage problems after a large crop.
Fischer Boel said the available export licences for the 1.3 million tonnes were taken in a very short time, and there are still large amounts of out-of-quota sugar left. The 27-member bloc was expected to have 2.4 million tonnes in sugar available for export after the 2009 beet harvest, leaving a surplus of about 800,000 tonnes not covered by annual EU export entitlements.
European beet growers in December said the export limit should be exceeded in order to shift surplus supply and alleviate a deficit in the world sugar market, arguing that high prices on the world market meant that EU exports could not be considered as subsidised. Fischer Boel said the Commission's legal services are analysing the "exceptional circumstances" of the market as a matter of urgency, if it would be possible to authorise exports beyond the WTO limit.
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