Sown areas of sugar beets in Europe are declining, sugar prices have fallen to record low levels, there is practically nothing to protect the crop from pests.
It becomes unprofitable for European farmers to engage in sugar beets, Dr. Olaf Zinke writes in his material on the portal www.agrarheute.com. And we can say that the farmers will reduce the cultivated area under this crop in 2020.
With regard to purchase prices for the upcoming harvest, the European futures market in London is currently showing only slight growth - although a decrease in sugar production is expected on the world market.
The reason for the constantly low sugar prices in the European market is simple: although, according to the European Commission, the area of sugar beets in the EU will be reduced by about four percent or almost 100 ha this year, sugar production is expected to increase by almost nine percent due to significantly higher yields compared to the drought in 000.
However, crop pests can make adjustments to expectations for sugar beet yields in the EU, because instead of banned neonicotinoids, farmers can use only less effective pest control methods.
It should be noted that in two countries where a high crop yield is expected, namely in France and Germany, estimates of cultivated areas under sugar beets from German associations are even lower than those voiced by the EU Commission.
Nevertheless, even if the reduction in sown area is stronger than expected by the EU Commission, the number of beets in the output is still expected to be higher than in the previous year. This is also indicated by the futures market in London, which puts expected sugar prices only slightly above the current very low level.
Based on current estimates of the area and yield of sugar beets, the EU Commission expects that in the new marketing year sugar production in Europe will be about 18,3 million tons. This will be 0,7 million tons of white sugar more than was produced in the dry year 2018.
Sugar production will be slightly higher than the currently estimated European consumption of 18,1 million tons. Moreover, according to the EU Commission, consumption is reduced by 0,5 million tons compared to the previous year. Final stocks remain virtually unchanged with relatively stable exports. Thus, the degree of self-sufficiency in sugar in Europe is more than 100 percent.
All this does not seem like a sharp recovery in the market.
European sugar associations are also under pressure from producers and processors in the EU, because supplies from third countries currently exceed demand in the EU.
Sugar prices continue to fall in the European domestic market and are at historically low levels. The latest sugar price reported by the European Union was only 314 euro / ton white sugar. This is not only a historical minimum, but it is 62 euros less than last year on the same date.
Distortion of competition to the detriment of, for example, German producers, plus a reduction in special allowances for growing sugar beets, as well as very low prices indicate a further reduction in sown area in 2020.
Low sugar prices cannot cover the costs for the most efficient producers and processors, sugar industry officials say. We have to admit that the industry is in an unprecedented crisis.
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