EU Prices remain at a premium to the world market.
At current levels we have started to see €98 duty CXL imports into the EU.
This volume is limited meaning it has little impact on the raw sugar market oversupply.

Duty-Paid Imports Start to Arrive

Small volumes of CXL raw imports have now become workable with 123k tonnes shipped for 2018/19.
This is made up of 45k tonnes of €98 CXL duty (India and Erga Omnes) plus the full 78k tonnes €11 Brazil CXL.

However, with nearly 3m tonnes excess raw sugar supply over the next 9 months this does little to resolve the oversupply.
To have more significant effect on reducing the raw sugar surplus, the premium would need to increase $165/MT before the full Erga Omnes quota (255k tonnes).
Similarly, full duty CXL access from Australia, Brazil and Cuba (411k tonnes) require a premium closer to $200/MT.

2019/20 Imports Increased

Based on our current 19/20 production forecast, we think that the EU will continue to require significant import volumes.
We now forecast 1.97m tonnes of imports in 19/20.
In order to incentivise imports, the EU premium will need to trade at current levels or above at some points in the season.
Due to the sustained high prices and tight stocks at the end of 18/19 we think ACP/LDC imports will increase by around 275k tonnes to their maximum volume.
White FTA imports will also increase by around 100k tonnes with South Africa making use of its full 150K tonne access.

Import Origins

EU Imports and Exports

Despite an increase in imports EU stocks will remain tight: EU-28 stock to use will be below 10% at the low point in the cycle compared to 40% stock to use globally (see Czapp sugar data).
If the crop performs better than we are currently expecting then pressure on stocks will reduce.
This could lead to an increase in the exportable surplus, however the premium would need to reduce to much lower levels for exports to be workable.

Our production estimate remains at 17.9m tonnes, marginally higher than 18/19 and 700k tonnes below consumption.

EU Production

Weather in much of Europe has been warm and wet: very favourable for beet development.
This has retuned soil moisture to more usual levels at this stage following concerns over dry soil.
However, the soil remains dry in Germany, which produces about 20% of EU sugar.
But the weather is also good for yellow virus carrying aphids…. The threat of threat of yellow virus remains due to the neonicotinoid ban.
However, to date only a handful of yellow virus carrying aphids have been detected in the UK.
We are maintaining our yield forecast at 5% below the 5-year average where neonicotinoid use is banned and at the 5-year average elsewhere.