EU Sugar Market Seen Balanced in Two Years as Imports Rise

(Bloomberg) – The European Union sugar market will probably be balanced in two years as imports from preferential nations are set to rise, reducing the need for the bloc to take steps to boost supplies, Czarnikow Group said.

Shipments from countries that have trade agreements with the EU will reach 2.86 million metric tons in the 2014-15 season, estimated Peter de Klerk, a senior analyst at the London-based Czarnikow, which traded sugar in more than 90 countries in 2011. That compares with a forecast for imports of 2.34 million tons in the current season, according to the European Commission, the bloc’s regulatory arm.

Europe faced sugar shortages in the past two seasons after supplies from preferential nations fell short of the commission’s forecasts. That prompted the bloc to allow more imports and authorize local producers to sell more in the domestic market. For the current marketing year, shortages are also foreseen and the commission has said it will boost local supplies by 1.2 million tons.

“The EU quotas market will be in equilibrium” in 2014-15, de Klerk said at the Kingsman EU Seminar in Geneva today, adding that imports from preferential nations have started to rise and will probably continue to do so.

Applications to import sugar from preferential nations including a group of least developed countries and some members of the African, Caribbean and Pacific group of states have reached 1.13 million tons so far this season, Roger Waite, a spokesman from the commission, said in an e-mail today. That compares with 1 million tons in the same period in 2011-12. The season started in October and will end in September.

Preferential Nations

The cost of importing sugar from preferential nations climbed to 620 euros ($809) a ton in January, according to the commission. That was the second-highest price since at least 2006 and 63 percent above the average of the white sugar futures traded on the NYSE Liffe exchange in London that month.

Some of the preferential nations may opt to export their sugar production to Europe during the season and import the sweetener for their local use, de Klerk said. A new trade agreement with countries including Peru, Colombia and nations in Central America will also bring in additional supplies of 260,000 tons to the EU, he said.