ISO: The EU sugar market outlook post 2017


The International Sugar Organization (ISO) presented to AgroTypos a study on the EU Sugar Market Post 2017. It is about an outlook for sugar production, imports and exports in the context of the 2017 Reform of the EU Sugar Regime. The study has shown that the future abolition of sugar and isoglucose production quotas as well as minimum beet prices from 2017/18 will possibly lead to higher production on the back of a more efficient and leaner industry and relatively profitable margins. This would lead to a reduction in imports of sugar from the EU and to an increase in exports.

According to the study sugar production costs in the EU will continue to fall (as a result of higher yields and greater investment), to remain below the import parity price level for raw sugar under preferential trade (including EPA/EBA and CXL). As such, the EU may lose its current status as one of the world’s largest sugar importers.

Moreover, this work presents two scenarios for EU production and trade post 2017. Sugar production is forecast as ranging from 15.8 to 19 million tonnes, white value, in 2017/18, and sugar consumption may fall from the current level of 18 million tonnes due to the likely increased penetration of isoglucose in the bloc’s soft drink industry.

While sugar and isoglucose are not perfect substitutes (they only compete in about 30% of the total sweeteners market in the bloc), a scenario of high domestic EU prices will prompt consumption of isoglucose by the industrial end users to rise by as much as 2 million tonnes, denting the sugar market share in that branch of the EU market.

The second scenario refers to lower EU prices for domestically produced sugar may prevent isoglucose offtake to rise by as much, securing a domestic market share for beet sugar whilst at the same time fending off further imports. As such EU will become a net sugar exporter with 2.5 million tonnes of exports as against 1.5 million tonnes of imports.

Finally, the EU failing to even exceed 3.0 million tonnes might disappoint preferential exporting countries, especially those of the LDC/ACP GROUP, which will continue to enjoy duty-free access into the EU, with forecast imports. Further investment in these countries’ sugar industries should be therefore also aimed at regional as well as world markets.

Nevertheless, a faster than expected development of a beet bioplastic industry as well as a significant offtake of beet ethanol production could still come as welcome surprise, boosting further potential sugar import demand by the EU beyond current market expectations.

 

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