EU Sugar: When will Prices be as volatile as World Sugar Prices? – Market update November 2018
Following up on our BLOG of August, we get confirmed that world market prices will rise. Raw Sugar Prices rose by 15% since August 2018, with a peak of +26% in October 2018. The seasonality and world inventory levels should push prices further up in future.
In opposite to the world market, EU White Sugar Prices show a decline of prices of 9% in October vs. August. This looks different in the three EU regions. Prices only dropped in DE, FR, BE, UK and NL. All other countries report increasing prices, for the same period August vs. October. Lowest price reported for this period are 307€/ton and highest of 398€/ton.  (EU, 2018)
EU Sugar Prices get closer to World Market Prices
While the World Sugar Market clearly underlies the S&D Market Rules since “ever”, the European Sugar Market started transferring into this direction, too. This year EU Sugar Buyers benefited from the general World Market development and from the liberalization of their own market. But, when will this turn around, and influenced by the World Market?
EU Trade statistics show clearly a change in net trade. Since the crop year 2017/18 the EU became an Exporter, with a net trade of 2,045 Mio, the EU exported 3,347 Mio. Tons – in the CY 2013/14-2016/17 the EU exported 1,352 Mio. Tons, in average.
It looks obvious that EU Sugar Producers are prepared to react rather quickly on market changes – Supply Chains are established. In 2017 they were able to export 3,347 Mio. Tons of Sugar while importing nearly half of the volume compared to CY 2016/17. Both they never imported less and exported more since the CY 2008/09!
Will EU Sugar Buyers be able to follow the pace of Sugar Producers if this increase? Should EU Sugar prices become as volatile as the World Market Prices, and become a real soft commodity, who will be better prepared, the Seller or Buyer of Sugar?
EU Sugar started become a commodity, hence, it will be a highly leverageble product. Buyers can obtain best results once they have enough sources and suitable specifications. A tailored Sourcing Strategy should be ready to be applied once the market circumstances allow leveraging. There is a chance to cut cost out of the supply chain.
- (06. Dezember 2018). EU Sugar Market Observatory (SMO) – updates. (A. A. European Commission – DEVELOPMENT, Herausgeber) Abgerufen am 13. 12 2018 von EU Sugar Market Observatory – PRICES – Producers: https://ec.europa.eu/agriculture/sites/agriculture/files/market-observatory/sugar/doc/prices_producers_regions_en.pdf
europa.eu/agriculture. (13. 12 2018). Abgerufen am 13. 12 2018 von market-observatory/sugar/doc/market-situation_en.pdf: https://ec.europa.eu/agriculture/sites/agriculture/files/market-observatory/sugar/doc/market-situation_en.pdf