The acreage of sugar beet in Europe is shrinking, sugar prices have fallen to record lows, and there is little to protect the crop from pests.
It is becoming unprofitable for European farmers to deal with sugar beets, writes Dr. Olaf Zinke at www.agrarheute.com. And we can say that farmers will reduce the sown area under this crop in 2020 as well.
In terms of purchase prices for the upcoming harvest, the European futures market in London is currently showing only modest growth - although the global market is expected to decline in sugar production.
The reason for the persistently low sugar prices in the European market is simple: although the European Commission estimates that the area of sugar beet in the EU will shrink by about four percent this year, or nearly 100 hectares, 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 their own adjustments to expectations of sugar beet yield in the EU, since instead of banned neonicotinoids, farmers have access to only less effective methods of pest control.
It should be noted that in two countries where high crop yields are expected, namely in France and Germany, the estimates of the cultivated areas under sugar beet from the German associations are even lower than those announced by the EU Commission.
However, even if the reduction in acreage is more severe than anticipated by the EU Commission, the beet yield is still assumed to be higher than in the previous year. This is also indicated by the futures market in London, which pushes the expected sugar prices only slightly above the current very low level.
Based on current estimates of the area and yield of sugar beet, the EU Commission expects sugar production in Europe to be around 18,3 million tonnes in the new marketing year. This will be 0,7 million tonnes more white sugar than was produced in the 2018 dry year.
Sugar production will be slightly higher than currently estimated European consumption of 18,1 million tonnes. At the same time, according to the EU Commission, consumption is reduced by 0,5 million tons compared to the previous year. Ending stocks remain virtually unchanged with relatively stable exports. Thus, the degree of self-sufficiency in sugar in Europe is over 100 percent.
None of this looks like a sharp market recovery.
European sugar associations are also under pressure on EU producers and processors as supplies from third countries currently exceed EU demand.
Sugar prices continue to fall in the European domestic market and are at historically low levels. The last sugar price reported by the European Union was only 314 € / t white sugar. This is not only a historic 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 surcharges for the cultivation of sugar beets, as well as very low prices indicate a further reduction in acreage 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.
Read more: https://www.agroxxi.ru