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Foods
EU Commission forecasts a decline in sugar output
06 July 2012
John O'Reilly
FACTS: Output this year is forecast to decline by 5.4% year-on-year.
ANALYSIS: Sugar production in this year's harvest in the EU is forecast to be lower than last year, according to the latest assessment by the EU Commission, Agra Europe reports. The Commission estimates the overall decline at 5.4%. Output is forecast at 17.6m tonnes compared with 18.6m tonnes for the 2011/12 harvest. Most of the forecast decline is due to an expected fall in sugar yield: 11.1 tonnes per hectare (t/ha) compared with 11.6t/ha in 2011/12. French output — France is the biggest EU producer — is expected to decline by 3.2%. In addition, cane sugar output in French overseas territories, which form part of the French quota, is forecast to decline to 280,000 tonnes from 417,000 tonnes in 2011/12. In Germany, the EU's second biggest producer, output is forecast to rise by 1.8%. Output in Poland, the third largest producer, is forecast to decline by 14.1%.
DAVY VIEW: It is assumed that weather factors account for the forecast decline. Globally, weather is also impacting, or threatening to impact, other crops (e.g. corn in the US), as a result of which prices are firming. While it is too soon to call a re-run of the 2008/9 price inflation in food commodities, that cannot be ruled out. The next few weeks in the US Mid-West will be telling in this regard. For EU sugar beet processors, the price outlook is positive.