British Sugar owner AB Sugar said Thursday higher beet yields would offset a drop in planted area in the UK and take 2019-20 (October-September) sugar production 3,000 mt higher on the year to 1.18 million mt.
S&P Global Platts Analytics forecasts total 2019-20 EU sugar production will be down 443,000 mt on the year at 17.488 million mt as a result of dry conditions early in the season and heavy rainfall late in the season, meaning beet yields did not offset a reduced planted area in the main producing countries of France and Germany.
However, in the UK, AB Sugar said the campaign was progressing well, even though it did acknowledge there had been "high levels of rain which have at times limited harvesting."
The company, a unit of Associated British Foods, reported that in Spain, its beet sugar production "is expected to be lower than last year at 210,000 mt" due to a lower area planted to beet, but that this would be compensated for by an increase in the amount of raw-sugar refining.
AB Sugar said in the trading statement that "EU sugar prices have remained at levels higher than last year and our UK and Spanish businesses have now substantially completed contracting sales for this financial year."
It added that the higher prices, combined with reductions in the cost of production due to lower contracted beet prices in Spain, would "deliver a material improvement in our sugar profit this year, weighted to the second half."
European spot delivered sugar prices are now Eur142/mt higher than the all-time lows of May 2018, with values for French delivered sugar heard Wednesday at Eur440/mt. S&P Global Platts assessed Spanish delivered sugar price at Eur530/mt Friday, the highest since August 2017, and this pushed the average price for the Mediterranean region to a two-year high of Eur508/mt.
Looking beyond Europe, AB Sugar said sugar production at Illovo, its African operations, is "expected to be some 1.7 million mt, broadly in line with last year, with production in a number of countries being limited by heavy rains at the end of the season."
The company reported its African sales were ahead year on year, but growing imports and falling consumption were reducing its effectiveness in the South African domestic market.
In China, the company forecast its sugar production would be 19,000 mt lower on the year at 130,000 mt, but a better-quality beet crop, and a payment system, "linking of some grower payments to the sugar content of their beet," is expected to deliver a higher operating result.
