February 25, 2016
Sugaronline | http://goo.gl/RvqeIY
The European Union on Thursday cleared the way for the export of 700,000 tonnes of white sugar, heightening concerns about tight supplies in its internal market and possibly triggering more imports of raws in coming weeks, according to Reuters.
A second tranche of 700,000 tonnes for the 2015/16 season was awarded, following an earlier tranche of 650,000 tonnes, taking the export total to 1.35 million, the maximum allowed under World Trade Organization (WTO) rules, the European Commission said in its Official Journal.
Traders said the European Commission had opted to export so-called out-of-quota sugar rather than reclassify it to allow it to be used to meet internal demand.
Output in excess of production quotas can only be exported or sold for biofuels or other industrial non-food uses.
"The EU has a supply problem so for them to grant these exports is a surprise to many," one European trader said.
"The EU is very tight and will become more reliant on raws imports to manage the domestic price. It looks like the EU will need to buy more raw sugar on the world market."
Supplies in the EU have been tightened by the prospect of the smallest sugar beet crop in more than four decades in 2015/16 due to a drop in planted area and lower yields triggered by adverse weather.
"As far as we can see the EU balance sheet requires special measures (such as allowing more raws imports) to be undertaken. It really is an incredibly tight situation in the EU and it needs to be addressed," one trader said.
"There are already reports from small cake makers and chocolate makers that they are struggling to get supply and sugar is expensive and the EU can't afford for this to really take a grip," the trader added.
Bids exceeded the 700,000 tonnes available and applications will 84.4% of the volume they requested, according to the official journal.
The awarding of the full second tranche means that no more export licences will be offered until the end of the season on Sept. 30, it said.