EU Sugar Inventories Are Too Low to Meet Demand, Nestle Says
Sugar stockpiles in the European Union are too low to meet demand because of constrained imports and adverse weather that hurt production, according to Nestle SA (NESN), the world’s biggest food company.
A shortage of the sweetener has caused prices in some EU member states to rise as much as 70 percent this year, Rabobank International said May 19. The EU will hold the third of five planned tenders to import sugar at a reduced duty on Aug. 25 after saying in July it would ship in 152,208 metric tons at a reduced tariff. Cold, snowy weather last winter kept EU farmers from collecting crops in a timely manner, reducing production and leading to shortages.
“There is a major issue in the EU of not being enough sugar available to meet demand, which inevitably has an adverse effect on price,” Nestle, the maker of KitKat chocolate bars, said in a statement this week. “Over the past few years, the necessary imports from outside the EU have not arrived as anticipated, and bad weather conditions in some sugar-producing countries have affected yields.”
Refined, or white, sugar traded on NYSE Liffe in London gained 38 percent in the past year and raw sugar jumped 49 percent on ICE Futures U.S. in New York.
R&R Ice Cream Plc, Europe’s largest private-label producer of ice cream, said prices for sugar-based foods in the EU may rise as much as 20 percent by April on higher costs for the sweetener. EU regulators should relax sugar-import tariffs and increase the quota “dramatically” for the 2012-13 season, Chief Executive Officer James Lambert said this week.
The European Commission’s sugar-management committee approved 300,000 tons of duty-free sugar imports in March. Also that month, the EU released 500,000 tons of so-called out-of- quota sugar normally set aside for industrial uses for food- making purposes. The commission is the 27-nation bloc’s executive arm.
To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
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