Delivery obligation a burden for American beet growers

Most Dutch growers have nothing to complain about regarding the yields of sugar beets. We should hold on to that because the sugar price is not currently favorable. This problem is not only occurring in the Netherlands. In America, beet growers are reporting that prices are at risk of falling below production costs. Because many growers in the US have a delivery obligation for beets, ceasing cultivation is not really an option. The sugar market had a brief upward trend, but in recent days, prices on the futures markets in London and New York have once again started to decline. Relatively good harvests of both sugar beets and sugar cane are putting pressure on the market. The average yields of sugar beets in the Netherlands are good. The sugar content is high at an average of 17.2%, reports the Dutch beet processor Cosun. The tare is relatively low at 7%. Cosun has revised the yield expectation upwards to 15.5 tons of sugar per hectare. In Germany, too, the beets have performed quite well this growing season, writes Südzucker in the commentary on its half-year figures. However, there are local reports of SBR and Stolbur, which is why Südzucker is cautious in making statements about the average hectare yields. Due to a significant shrinkage in the beet acreage, the German processor expects to produce less sugar this year compared to last year. Sugar division costs moneyThe figures from the sugar producer are disappointing. In the first half of the fiscal year 2025/26 (from March 1 to August 31), the company's revenue amounted to €4.199 million. Last year, Südzucker had a revenue of €5.092 million. The operational cash flow (Ebitda) decreased from €420 million in the first half of last fiscal year to €189 million this fiscal year. The revenue from the sugar division fell from €2.134 million to €1.389 million. In the end, the sugar division is running an operational loss of €89 million. Even significant cost-cutting during the 2024 campaign was not sufficient to compensate for the sharp decline in sugar prices, the company states in the commentary. Not only in Europe is the sugar sector facing challenges. In the US, growers are also worried about the profitability of sugar beet cultivation. The acreage for sugar beets is the smallest since 1982, but that is not enough to maintain prices. According to Reuters, the price for refined beet sugar is 33% lower than last year and at its lowest level since 2019. Meanwhile, there is still a lot of sugar on the market, and that situation is expected to last at least until 2026. OzempicThe demand for sugar among American consumers is declining. Research firm OC&C Strategy Consultants calculates that Americans are spending 6% less on candy and chocolate and 10% less on sweet bakery products. On the other hand, nearly 9% of the American population is using weight-loss products like Ozempic or Wegovy. For American farmers, beet cultivation has been a stable factor for years due to a heavily regulated sugar market. However, high cultivation costs, increased competition from sugar outside the US, and the trade war have made beet cultivation no longer profitable for many growers. One grower mentions to Reuters a new beet harvester. A machine built in Europe cost around $750,000 about five years ago, but now costs more than $1 million. Stopping beet cultivation is difficult. Many growers have shares in the local cooperative sugar factory with a delivery obligation. If you want to get rid of the beets, you need to find someone willing to take over that quota, a grower tells Reuters. Sufficient rain in IndiaDue to sufficient rain during the monsoon in India, expectations for the sugarcane harvest there are good. During the monsoon (June to September), an average of 937 millimeters of rain has fallen in India, reports the Indian meteorological service. This is 8% more water than the multi-year average and the most rainfall during the monsoon season in five years. As a result and due to an increase in acreage, the Indian association of sugar factories expects the sugar harvest in the 2025/26 season to reach 34.9 million tons. For comparison, last season's harvest was 26.2 million tons, which was, by the way, the smallest harvest in five years. Lower sugar percentageA more favorable piece of news for the sugar market is coming from Brazil. According to Unica, the sugar percentage in the cane processed in September is lower than last year in this month. From a ton of cane, 154.58 kilos of sugar were obtained, compared to 160.07 kilos from a ton of cane last season. The export of sugar and molasses from Brazil is also proceeding at a slower pace. According to the Brazilian foreign trade service Secex, Brazil exported 3.245 million tons of sugar in September. This is 16% less than in the same month last year. The price for the exported sugar was also significantly lower, averaging $403.40 per ton this September compared to $459.70 per ton in September 2024. In the first nine months of this calendar year, Brazil exported 23.4 million tons of sugar. This is 17% less than in these months in 2024.