Sugar Annual

An Expert's View about Processed Fruit and Vegetables in Germany

Last updated: 5 May 2011

In MY 2009/10, the EU harvested a record sugar beet crop, with the third record yield in a row, as a result of near ideal growing conditions.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 4/22/2010 GAIN Report Number: E50033 EU-27 Sugar Annual 2010 Approved By: Elisa Wagner Prepared By: Yvan Polet Report Highlights: In MY 2009/10, the EU harvested a record sugar beet crop, with the third record yield in a row, as a result of near ideal growing conditions. Due to large internal supplies, reduced world supplies and high world market prices, the EU exported an additional 0.5 million MT beyond its WTO export ceiling. Despite high world market prices, EU sugar imports in MY 2009/10 increased as a result of EBA and EPA agreements and further increases are forecast in MY 2010/11 when prices stabilize and as new free trade agreements with Columbia and Peru come into force. Despite high exports, EU sugar processors are expected to ?carry-over? 0.5 million MT of sugar into the MY 2010/11, thus lowering the amount of sugar from the 2010 crop that can count towards the MY2010/11 sugar production quota. Executive Summary: Early forecasts for EU sugar production in the EU-27 in MY 2010/11 suggest a decrease of some 2.8 million MT of raw sugar equivalent (RSE) or more than 15 percent compared to MY 2009/10. This is because about 0.5 million MT of sugar from MY2009/10 is expected to be carried over to MY2010/11, which will reduce the MY2010/11 sugar production quota. Beet sugar production in MY 2009/10 exceeded all previous yield records in all major EU producing member states, leading to large over-quota supplies. As a result, commercial stocks at processor level are also expected to increase. Imports of sugar are expected to end higher in MY 2009/10 as a result of the implementation of the EBA and EPA agreements in spite of high world market prices. In MY 2010/11, imports are forecast to further increase especially if world market prices decrease again and as new import quota open as a consequence of new Free Trade Agreements (FTA?s) signed with Columbia and Peru in 2010. MY2009/10 exports of EU sugar will exceed the EU?s WTO export ceiling for sugar as a result of an additional export quota for out-of-quota sugar taking advantage of high world market prices for sugar in early 2010. Commodities: Sugar, Centrifugal Production: EU estimates expect that total EU sugar beet production in marketing year (MY) 2009/10 may reach 19.3-19.6 million MT raw sugar equivalents (RSE). This results from near ideal year-long growing conditions throughout the major beet production area in Western Europe and the third year in a row record yield levels were achieved. As a result, out-of- quota production in MY 2009/10 will likely amount to 5 million MT RSE. This includes sugar beet production destined for bio-ethanol production and industrial use, as well as out-of-quota sugar processing for exports. Bio-ethanol production from sugar beet in MY 2009/10 is only marginally increasing compared to MY 2008/09 because the combination of high world sugar prices and low EU cereal prices made cereals a more economic feedstock for fermentation than sugar beet. For MY 2009/10, EU beet sugar production is finishing 1.2 million MT higher than the previous report [1] ?s record estimate. As a consequence of the large out-of-quota production, some 0.5 million MT of excessive out-of-quota sugar is expected to be carry- over sugar into the MY 2010/11 sugar production quota, inducing a 5 percent decrease in sugar beet area. Contrary to past pre-sugar reform years, carry-over of sugar stocks to MY 2010/11 are bound at the sugar processor level and are not imposed at EU Member State level. Early planting indications for 2010 suggest that total EU sugar beet production for MY2010/11 may result in a 15 percent reduction in EU production (in RSE), even if it is unclear how bio-ethanol production from sugar beet will evolve after a difficult MY 2009/10. Sugar quota as a result of the EU sugar reform [2] EU sugar production quota in MT Member States MY 2007/08 MY 2008/09 MY 2009/10 Belgium 882301,0 676235,0 676235,0 Bulgaria 4752,0 0 0 Czech 372459,3 372459,3 372459,3 Denmark 452466,0 372383,0 372383,0 Germany 3655456,0 2898255,7 2898255,7 Ireland 00 Greece 158702,0 158702,0 158702,0 Spain 887164,0 630586,2 498480,2 France 3640442,0 2956786,7 2956786,7 French overseas 480244,5 480244,5 480244,5 Italy 753846,0 508379,0 508379,0 Latvia Lithuania 111010,0 90252,0 90252,0 Hungary 298591,0 105420,0 105420,0 Netherlands 931435,0 804888,0 804888,0 Austria 405812,0 351027,4 351027,4 Poland 1772477,0 1405608,1 1405608,1 Portugal 15000,0 0 0 Azores 9953,0 9953,0 9953,0 Romania 109164,0 104688,8 104688,8 Slovenia 00 Slovakia 145904,0 112319,5 112319,5 Finland 90000,0 80999,0 80999,0 Sweden 343422,0 293186,0 293186,0 UK 1221474,0 1056474,0 1056474,0 TOTAL 16742073,0 13468847,2 13336741,2 EU sugar beet production Area, thousands of Hectares Sugar beet yield in MT per Hectare Sugar content in percentage 07/08 08/09 09/10 10/11 07/08 08/09 09/10 10/11 07/08 08/09 09/10 10/11 Austria 42.3 43.0 43.9 44.0 62.1 71.8 70.6 71.0 16.60 16.96 16.30 17.00 Belgium 82.7 64.0 63.8 60.0 68.3 68.6 77.1 70.0 17.00 17.82 18.40 17.50 Denmark 39.4 36.2 38.5 38.0 57.2 60.0 54.5 55.0 17.80 17.80 19.60 18.00 Finland 16.0 13.6 14.8 14.0 41.9 34.6 37.7 38.0 16.80 16.48 17.20 16.50 France 393.5 349.0 370.0 360.0 83.7 86.8 89.6 85.0 18.10 18.70 19.50 18.50 Germany 391.5 363.8 379.6 385.0 64.2 63.2 71.5 68.0 17.46 18.04 18.15 18.00 Greece 13.6 13.8 24.0 23.4 56.7 64.5 66.2 66.0 13.40 14.00 14.00 14.00 Italy 85.6 61.2 60.6 60.5 59.0 62.9 59.0 60.0 16.60 15.48 15.95 16.00 Netherlands 82.1 72.2 73.0 70.0 66.6 71.6 73.0 17.40 17.21 17.70 17.20 Portugal 1.6 0.3 0.2 0.2 76.7 40.8 40.9 40.9 16.34 13.45 14.39 14.40 Spain 55.4 50.7 47.7 47.0 79.1 80.8 78.2 79.8 17.56 17.86 17.35 17.40 Sweden 40.8 36.8 39.4 40.0 52.5 53.5 53.4 53.0 17.70 17.40 18.30 17.50 U.K. 125.1 119.8 119.3 120.0 53.8 63.8 69.9 60.0 17.96 17.65 18.00 17.50 Czech R. 54.3 51.0 53.7 50.0 54.7 57.2 52.3 17.10 18.04 16.85 0.00 Hungar y 41.2 9.6 13.3 13.0 41.0 59.6 52.9 15.90 17.14 Lithuania 16.9 8.7 15.1 15.0 47.4 39.0 45.1 45.0 17.50 18.13 17.50 17.50 Poland 247.4 187.5 200.0 190.0 46.6 46.5 46.9 46.6 17.10 17.20 17.10 17.10 Slovak R. 18.9 11.0 15.0 16.0 47.5 61.0 46.6 16.20 17.21 17.00 16.50 Romania 28.7 20.4 18.3 18.0 26.0 34.6 31.9 32.5 15.10 16.50 Total EU-15 1369.6 1224.4 1274.8 1262.1 65.0 67.5 17.60 Total NMS 407.4 288.2 315.4 302.0 Total EU-27 1777.0 1512.6 1590.2 1564.1 60.9 63.8 64.7 17.50 17.70 18.50 Note: Beet sugar production numbers in this table include sugar beet production for bio-ethanol or other industrial fermentation purposes. However, only production of solid sugar is provided in the PSD statistical table. Source: EU FAS posts [1] http://gain.fas.usda.gov/Recent%20GAIN%20Publications/EU-27%20SUGAR%20SEMI- ANNUAL_Brussels%20USEU_Belgium%20EU-27_11-20-2009.pdf [2] Because the EU sugar market organization limits sugar for human consumption to sugar produced within quota, out-of-quota sugar beet can only be used for fermentation and other industrial uses, as well as for sugar production for exports or carry-over into the production quota of the following year. Because sugar production quota are handed to processors at EU member state level, in-quota sugar production in member states can remain below the quota despite large over-quota supplies. Consumption: The EU domestic consumption is rather stable around 16.8 million MT RSE. The majority of this sugar is used in the food processing industry. However, this number includes EU exports of sugar containing food and drink products. Trade: Imports EU sugar imports for MY 2009/10 are expected to end 10 percent higher than MY2008/09 imports as a consequence of the signing of new Economic Partnership agreements (EPA) with ACP countries and the implementation of the Everything But Arms (EBA) agreement, which allows duty free access to EU markets for Least- developed countries (LDCs). This is despite sluggish imports at the beginning of the MY 2009/10 when world market prices for sugar exceeded EU internal guaranteed sugar prices. Since then, world market prices have decreased, while the Euro exchange rate also dropped as a result of the ongoing EU financial crisis. High world market prices and EU import duties make it difficult for full-time refiners who need year-round supply. However, the European Commission has refused to meet refiners? demands for the abolishment of import duties because of the EU domestic supply situation. It is also expected that MY 2009/10 duty-free sugar imports for inward processing purposes will decrease as a result of the high world sugar price situation. EU sugar imports for inward processing in MY2008/09 were around 300,000 MT RSE compared to 213,000 MT in MY 2007/08. For MY 2010/11, EU sugar imports are expected to further increase as agreements like EBA and EPA?s are fully implemented, especially if sugar prices on the world market decrease again in comparison with EU reference prices. Also, new Free Trade Agreements (FTA) with Columbia and Peru [1] include new import quotas, of 62,000 MT and 22,000 MT of sugar respectively, with 3 percent increases every following year. Note: The registered price is the actual paid price on the EU domestic market Source: European Commission EU sugar reference prices and renounced quotas under the EU sugar reform Pre-reform 2006/07 (july-sept) 2007/08 (oct-sept) 2008/09 (oct-sept) 2009/10 (oct-sept) Reference Price for white 632 505 458 428 404 sugar (?/MT) Reference Price raw sugar 524 497 497 449 335 (?/MT) Restructuring Aid (?/MT of 730 730 625 520 - renounced quota) Quota renounced - 1,469,612.5 2,178,379.6 5,718,327 5,850,433 (Cumulative) (MT) Production of sugar and - 17,658,000 14,913,000 13,468847,2 13,336,741,2 isoglucose (Yearly) (MT) Data collected from DG Agriculture Exports EU sugar exports in MY 2009/10 are expected to amount to 2.2 million MT RSE. These sugar exports are almost exclusively for refined sugar. This is the result of large quantities of out-of-quota sugar exports, including an additional out-of-quota sugar export quota of 500,000 MT that was announced in Commission Regulation (EU) No 94/2010 [2] of February 3, 2010. This additional export quota is awarded by export licenses with only 30 days validity and is beyond the EU?s WTO export limits for sugar because of the situation with world market sugar prices exceeding the EU?s guaranteed internal market price. Also, some 150,000 MT of sugar were exported using MY 2008/09 export licences, which were valid through the end of December 2009. This high export level is driven by the large EU production. The main consumers of EU sugar are Israel, Algeria, Norway and Switzerland, and the Middle-East. This situation is not anticipated to be repeated again in MY 2010/11. [1] http://trade.ec.europa.eu/doclib/docs/2010/march/tradoc_145896.pdf [2] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:032:0002:0003:EN:PDF Stocks: EU sugar stocks at the end of MY 2008/09 were limited to commercial pipeline levels. However, the 2009 bumper crop is poised to push end of MY 2009/10 stocks up by over one million MT. Some 500,000 MT is expected to be declared by processors as carry-over for the MY 2010/11 production quota, lowering the amount of new production that can count towards the production quota. Although it is impossible to anticipate on the 2010 growing conditions, ending stocks for MY 2010/11 are forecast to decrease again by a similar amount. Production, Supply and Demand Data Statistics: EU27 Sugar, Centrifugal 2008/2009 2009/2010 2010/2011 Market Year begin October 2008 October 2009 October 2010 USDA USDA USDA New New Old Post Old Post Old Post New Post Official Official Official Post Post Beginning Stocks 3,130 3,130 3,130 2,175 2,175 2,232 0 0 3,365 Beet Sugar Production 13,320 13,320 13,758 15,200 15,200 16,400 0 0 13,600 Cane Sugar Production [1] 250 250 256 285 285 283 0 0 285 Total Sugar Production 13,570 13,570 14,014 15,485 15,485 16,683 0 0 13,885 Raw Imports 2,665 2,665 2,605 2,900 2,900 2,900 0 0 3,100 Refined Imp.(Raw Val) 585 585 568 600 600 550 0 0 600 Total Imports 3,250 3,250 3,173 3,500 3,500 3,450 0 0 3,900 Total Supply 19,950 19,950 20,317 21,160 21,160 22,365 0 0 21,150 Raw Exports 85510 Refined Exp.(Raw Val) 1,100 1,100 1,323 1,470 1,470 2,190 0 0 1,450 Total Exports 1,105 1,105 1,331 1,475 1,475 2,200 0 0 1,460 Human Dom. Consumption 16670 16670 16754 16,500 16,500 16,800 0 0 16,900 Other Disappearance 00000000 0 Total Use 16,670 16,670 16,754 16,500 16,500 16,800 0 0 16,900 Ending Stocks 2,175 2,175 2,232 3,185 3,185 3,365 0 0 2,790 Total Distribution 19,950 19,950 20,317 21,160 21,160 22,365 0 0 21,150 [1] A little cane sugar is produced in the French and Portuguese Overseas Territories only. Notes to the reader: ? In this report, all sugar is in raw sugar equivalent unless otherwise noted. ? The PSD in this report only pertains to sugar as defined by HS 1701. It hence excludes sugar beet production destined for fermentation or other industrial purposes. ? Conversion factors and methods used in this report after FAS reporting instructions: MY = marketing year; for sugar October- September Raw cane sugar = 1,07 X Refined cane sugar Raw beet sugar = 1,087 X White (refined) beet sugar ? Sugar imports for EU inward processing purposes are excluded from this report?s PSD as they are entirely re-exported as processed products. Inward processing is the EU program under which the import duties for dairy, sugar and starch containing commodities for processing and subsequent re-export are suspended when world market prices are lower than EU commodity prices. Attachment Attachment Link EU27 Sugar annual 2010.xls Download
Posted: 04 May 2011, last updated 5 May 2011

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