Sugar production in Europe could fall to 15 mln tons

Sugar production in the European Union and the UK could fall to around 15 mln tons, the lowest level since 2015. Deteriorating sugar beet crop prospects are increasing the likelihood that the EU will need to boost purchases from the global market.

Last week, the European Commission’s crop monitoring service MARS lowered its forecast for average EU sugar beet yields to 76 t/ha. This is around 7% below last year, although the forecast remains close to the five-year average.

Unfavorable weather conditions are the main reason behind the deteriorating outlook. Prolonged heat has negatively affected crops and left little potential for yields to recover, increasing the risk of a further decline in sugar beet production.

Against the backdrop of lower domestic production, the European Union could potentially become a net importer of sugar, according to StoneX analyst Pedro Antichera. Higher EU import requirements could provide additional support to the global sugar market.

The situation is being compounded by risks to global supply. El Niño could negatively affect sugar cane production in key Asian producing countries, particularly India and Thailand. The combination of lower European output and weather-related risks in Asia is increasing concerns over a potential shortage in the global sugar market.

Tags: sugar, EU, UK