OREANDA-NEWS. The European Union will likely miss its export quota for the 2015-16 season due to lower output, according to Sopex, a UK-based sugar trading company. Sopex analysts forecast EU exports to be less than 1 million mt, which is less than the 1.35 million mt established in line with World Trade Organization rules.

In December, the European Union estimated EU sugar production in the 2015-16 season to drop 23% on the year to 14.9 million mt as a result of decreased sugarcane acreage.

Predicting EU sugar market conditions post-2017 'a great challenge': CIUS

Predicting the state of the sugar market after sugar quotas are abolished on September 30, 2017 is a "great challenge" but opportunities could be just around the corner, the Committee of European Users of Sugar (CIUS) said February 3.

"At the start it is new; predicting the EU market will be a great challenge," CIUS president Robert Guichard said at the Platts Kingsman Sugar Conference in Dubai. "Nobody can say anything about what will happen post-2017."

Guichard later added: "Post-2017 there will be new opportunities for the whole supply chain, including farmers, producers and consumers."

He identified some of the potential challenges the EU industry could face, including closer association with the world sugar market. "Domestic prices linked to the world market, they could converge with the world price," he said. "It will be a challenge to the product in the future. For buyers in the future the new outcome for the EU is that the market will be heavily dependent on the rest of the world."

"The EU could export without restrictions, but imports are limited," Guichard said. "EU refiners may be more opportunistic and focus on the world market price below the EU."

He also said the EU price will approach the world market price, which will ultimately force the sector to become more competitive, reducing the need for trade partners to export to the EU.

A number of questions were then raised, including whether the new market conditions would be considered an opportunity or a risk. At times the market will also need to decide whether to buy sugar or isoglucose and consider more closely the right time to buy.

Aside from monitoring world market prices more closely, considering both surplus and deficit scenarios, Guichard highlighted some wider factors the market and the European Commission will have to consider.

Should a new contract be with beet producers only, or will EU refiners also be active? What will happen if exports are unlimited when imports are restricted?

The crop and yield may be bad, while other crop competition could lead to limited sugar acreage.

Guichard said that to prevent a deficit, the EC must ensure additional supplies are at hand and available for use, should EU supplies be insufficient to meet demand. Access to imports must also be facilitated when needed.

Furthermore, he said temporary import TRQs must be introduced in time without duty, and opened for raw and white sugar to ensure sufficient alternate resources when required.

Guichard also echoed calls from the industry to eliminate the CXL duty of Eur98/mt in Europe. He said all additional duty for sugar should be eliminated and sugar must be included in all free trade agreements.