EU well placed to compete in oversupplied sugar market

The European Union is well place to remain a net sugar exporter over the medium term as its production costs are more competitive than rivals such as Russia and Pakistan, major French producer Tereos said on Monday. The EU this season became a net exporter for the first time in more than a decade after liberalisation of its sugar market last October, but the rise in EU production has contributed to concerns about a global supply glut in 2017/18, which has pressured world prices.
Alexandre Luneau, a member of Tereos' executive board, told the Dubai sugar conference that if a global surplus of white sugar forces production cuts, countries who are less competitive including some African origins, Pakistan, Ukraine and Russia would be hit first.
Both raw sugar and white sugar prices have shed more than a third of their value in the last year, partly due to the expected boost in EU production. Luneau said EU production had risen by more than four million tonnes in 2017/18 to 20.1 million, leading to a large surplus in the EU, reflecting a rise in both acreage and yields.
"We are talking about 17 percent more acreage, the biggest has been in the UK followed by France and Germany. The other thing is good weather," he said, adding yields were 8 percent above the five-year average. Luneau said higher production had been achieved without any new capacity by extending the period during which beet is processed by factories.
"Some factories are still running right now, which is exceptional," he said. Luneau said the EU exported one million tonnes in the first three months of the 2017/18 season (October/September), mainly to the Mediterranean region and West Africa. Major buyers included Egypt, Mauritania, Sri Lanka, Israel, Turkey, Lebanon and Syria.
The planting of the 2018/19 EU crop will be done in March and very little reduction in acreage is expected, he said. "The last campaign we had great weather so if we factor yields more in line with the last five years we will see a reduction by around one million tonnes," he said.