Isis Almeida / bloomberg
The European Union is poised to miss its sugar export quotas this season as a reduced harvest limits overseas sales, according to independent soft commodities trader Group Sopex.
The EUâ€™s 28-member nations will probably ship less than 1 million metric tons in the season that started in October, John Stansfield, a Sopex analyst, said in an interview before the Dubai Sugar Conference, a private event for 400 industry leaders that started Sunday. Thatâ€™s less than the 1.35 million-ton quota established by the EU under World Trade Organization rules. Licenses have been issued to export 650,000 tons so far.
Sugar production in the EU will fall 23 percent in 2015-16 to 14.9 million tons, the European Commission, the blocâ€™s regulatory arm, estimated in December. Dry weather in parts of Europe and smaller areas planted with beet mean some countries will produce less than they are allowed under EU rules, according to researcher F.O. Licht GmbH.
â€œThe European market is extremely tight,” said Stansfield, who has followed the market for more than 20 years. “To see the EU not export its full export quota, which we expect, itâ€™s a significant change for the white sugar market.â€
The drop in EU production is the main driver of a 7 million-ton shortage forecast for the global market this season, according to Sopex.