European sugar plants start early to beat worst of energy crisis

Bloomberg

European sugar producers are processing crops earlier than normal this year in a bid to avoid the worst of a winter energy crunch, but at the risk of smaller output.
Starting a few weeks earlier than usual should bring forward end of campaign, which typically wraps up during the coldest months — when energy supply is expected to be especially tight. Germany’s Nordzucker AG
has begun processing, while Suedzucker AG and French producers Cristal Union and Tereos also plan earlier starts.
The move is among the latest measures European businesses are taking to try to cope with a worsening energy crisis that threatens to cause power rationing and blackouts. In Germany, sugar firms including Nordzucker and Suedzucker have decided to share processing capacity if gas supplies become too scarce.
Harvest prospects for beets in the European Union, the world’s third-biggest sugar producer, have already been hurt by drought during the growing season. By starting processing early, crops risk missing out on much-needed rain that has now started to come, according to Claudiu Covrig, an analyst at Covrig Analytics.
“The fact that the EU acreage is lower on the year adds to the bullish European picture,” Covrig said. High energy costs and potential disruptions raise questions over EU producers’ ability to fully process beets, he said.
London sugar futures remain historically high amid worries over supplies in Europe and elsewhere. Combined output in the bloc and UK should total 16.4 million tons for the coming season, about 1 million tons lower than a year earlier, Czarnikow Group Ltd. estimates. That means the region may have to import more than usual.
Another problem for producers is that it may be hard to pass on higher energy costs.
“Traditionally it’s been difficult to pass on increases in costs to clients,” said Marie-Christine Ribera, director general at the European Association of Sugar Manufacturers. Europe has import quotas and beyond a certain price it becomes cheaper to import sugar, she said.