European sugar prices that are already the lowest since 2011 will stay low with production quotas ending in 2017, according to Goldman Sachs Group Inc.
White, or refined, sugar (NYBOT:SBN14) in the European Union averaged 574 euros ($781) a metric ton in April, the lowest since September 2011 and 21 percent lower than a year earlier, according to data from the European Commission, the EU’s executive arm. In 2017, the EU will end caps on how much sugar domestic producers, which mostly use beets, can sell.
“Lower sugar prices are here to stay as we expect the pending change in regulation to result in an increase in sugar supply from Europe when quotas are abolished,” Katherine Tait, an analyst at Goldman, said in a report dated yesterday. “This was a driver of the rapid deterioration in prices over the last six months as the market adapts to the change.”
Suppliers in Europe, particularly in the U.K., are becoming more competitive on price to gain access in “key markets,” Tait said. Goldman said in September EU sugar prices will fall to 500 euros in 2017-18.
The EU will produce 18 million tons of sugar in 2014-15, 7 percent more than 16.83 million tons in the 2013-14 season started Oct. 1, the French crop office FranceAgriMer said yesterday. In the U.K., the new beet crop for 2014-15 is making “very good progress,” according to Associated British Foods Plc., which owns British Sugar, the nation’s only beet processor.
Sugar prices have declined globally with supplies set to exceed demand for a fourth year in 2013-14 at 4.4 million tons, according to the London-based International Sugar Organization.
White, or refined, sugar for delivery in October fell 0.9 percent to $455 a ton by 2:51 p.m. on NYSE Liffe in London. Futures dropped 25 percent in the past two years.