EU: Sugar Shortage Leads to 70% Price Increase

A shortage of sugar in the European Union has caused prices in some member states to rise as much as 70 percent this year, according to Rabobank International.

The domestic price for sugar delivered in the second- quarter is ranging between 600 euros ($854) a metric ton and 850 euros a ton for new contracts, up from 499 euros a ton in January, the bank said in a report e-mailed today.

“There are signals of large price increases in at least Portugal, Greece, the Baltic countries and possibly other structural-deficit regions of the EU,” analyst Gorjan Nikolik said in an e-mailed response to questions today.

The EU authorized imports of 300,000 tons of sugar at zero duty in March to ease shortages in the 27-nation bloc. It also backed the sale of 500,000 tons of so-called out-of-quota sugar into the domestic market. Under EU rules, local producers can usually supply a limited amount of sugar to the market, and any surplus must be exported or put to non-food use.

The bloc should permit another 200,000 tons of imported raw sugar duty-free because of the shortage, the European Sugar Refiners’ Association said last month. The EU was facing a deficit of 1 million tons before the bloc took steps to increase supplies, according to Joao Pereira, the association’s chairman. Rising prices in the international market and a lower European reference price eroded EU sugar inventories, broker C. Czarnikow Sugar Futures Ltd. said in a report in March.

“Some residents in Poland and the Baltic countries are reportedly buying sugar from retailers inGermany to be re-sold at a sizable profit in their domestic markets,” Rabobank said in the report.

Poland will ask the EU to boost the sugar production quota by 15 percent, either in one move or with the increase spread over three years, Polish Farm Minister Marek Sawicki said on May 17.

White, or refined, sugar for August delivery fell $10.40, or 1.6 percent, to $622.60 a ton by 2:56 p.m. on NYSE Liffe in London. That was the first decline in six sessions.

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