French sugar firm sees beet boom holding
Date
12/24/2017 12:58:12 PM
(MENAFN- Gulf Times) Sugar is one of this year's worst-performing agricultural commodities, but that won't be enough to curb French beet plantings in 2018, according to the nation's top producer.
Growers supplying Tereos will probably sow a similar amount to this year because they've already signed supply contracts and returns for other crops aren't good, said Alexandre Luneau, the firm's executive vice president of market risk management.
This season, Tereos's sugar-beet output should jump 30% due to a bigger area and favourable weather, he said.
Production is set to surge this season in France, the European Union's largest producer, as well as other EU countries after decade-old curbs on output and exports were scrapped.
The end of restrictions, as well as several years of low grain prices, had prompted the bloc's farmers to expand the beet area.'The macro environment for western European farmers, it's a tough choice, Luneau said in an interview at Tereos's offices in Paris on Wednesday.
'We don't anticipate a major switch up or down. One would probably argue it should come down, but we don't really see it.
With poor returns for competing crops, growers will continue to favor sugar beet where the crop rotation allows. Tereos also signed two-year supply contracts with its 12,000 cooperative farmers, which will help guarantee output at a similar level to this year's 20mn metric tonnes, Luneau said.
The weather has also helped this year's crop. With the harvest almost complete, Tereos is still forecasting yields 8% above the five-year average. Some of its processing plants in northern France will run significantly longer than normal this season, for as long as 140 days, Luneau said.
Increased output in Europe has helped the global sugar market return to a surplus. While break-bulk shipments from the EU suffered some hiccups, exports in containers have been flowing smoothly. Overseas sales totalled 656,000 tonnes in the first two months of the season, signalling they could exceed the European Commission's forecast.
The extra EU supply means the white sugar premium, an indication of refining profitability, is currently trading at about $60 a tonne, down from more than $100 earlier in the year. That's threatening the business of refiners in or near the bloc, Luneau said.
Trader ED & F Man Holdings said in July it planned to close its factory in Israel, where 7% of EU shipments went in October and November.
Factories bringing in raw sugar to process into the white variety in markets that are protected by tariffs are likely to survive, Luneau said.
'There's very little room for refiners today, specifically if those markets are within reach of the large European producers, and that includes countries such as the UK, Italy, Spain, he said. 'One should not expect the white premium to go back up much.
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