High European sugar production is expected to drive sugar prices to a 10-year low as world output rises in the 2017/18 season.
It came as demand continued to fall, driven by lower consumption in Western nations.
French production was expected to hit a 25-year high, with production soaring across Europe following the end of quotas.
France’s Ministry of Agriculture pegged its 2017/18 harvest at 40.48 million tonnes, a rise of about 6mt year on year due to a surge in sowings. Germany’s sugar industry association, Wirtschaftliche Vereinigung Zucker, forecasted a 31.48mt domestic sugar beet harvest, up 27 per cent year on year.
In the UK, British Sugar owner Associated British Foods forecasted production at 1.4mt, up from 900,000t last season, with its contracted area growing by a third.
“Looking ahead to 2017/18, EU sugar prices will be below those achieved in the current year,” said a spokesman.
“However, the profit impact of this is expected, to some extent, to be mitigated by the higher production volumes and the benefit of euro strength against sterling on euro denominated sales. Beet costs will be in line with this year.”
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) lowered its forecast for the average price of spot New York raw sugar futures in 2017/18, on an October to September basis, to the lowest average since 2007/8.
Indian production was also expected to rise by about 27mt.
But in Australia, cane sugar production was expected to be hit by continued dry seasonal conditions in the centre of the country’s sugar industry.
With falling demand in the EU and US due to health concerns and nutrition policies, ABARES forecasted consumption at 185mt in 2017/18.