The EU sugar contract provides a minimum beet price of €26.29/t for beet with 16% sugar content. Weakening of sterling has meant that the sterling price for the 2016/17 year has increased. British Sugar announced an increase in price for the 2016 crop from £20.30/t to £21.62/t based on ‘the average September exchange rate’.
The grower announcement refers to the arrangements in the IPA agreement rather than EU legislation. The increase appears to be below that expected from application of the exchange rate to the minimum price.
Indications are that production may again not meet quota so any surplus beet should receive the full revised price.
EU sugar price rises are lagging behind global prices (as usual) but are on the way up. The last reported EU white sugar price was €437/t for August, suggesting a sterling price still under the threshold for a 2017/18 bonus. This is increasingly making the low base price agreed between the NFU and British sugar disappointing but it is still above even the revised 2016/17 price – although we think both prices should be higher.