European sugar prices could see “some price recovery” during 2015-16, according to British Sugar’s parent company Associated British Foods (ABF).

The company says while world prices have declined to the lowest level for six years, EU sugar prices have now stabilised and prices in China have increased as a result of lower domestic production and stocks.

Despite the more positive outlook, UK beet growers have already been told by British Sugar they will receive a reduced price of £20.30/t for their contracted tonnage in 2016-17.

See also: British Sugar cut 2016-17 beet price by 15%

In a trading update issued on Monday (7 September), ABF said it expected revenue and adjusted operating profit for AB Sugar to be substantially lower than the previous year because of lower European prices over recent months.

But it added: “Sugar prices in the EU have now stabilised and with quota stock levels reducing back towards historic norms, we expect to see some price recovery during 2015-16.”

The UK crop for the 2015-16 season had made good progress but, with a 20% reduction in the contracted area, and a return to more typical beet yields, sugar production was expected to be just short of one million tonnes, it said.

This would lead to a fall in quota stock levels.

“Delivered beet costs for the 2015-16 campaign will be some 20% lower than the current year with a further substantial cost reduction now secured for the 2016-17 campaign.”

Across the AB Sugar group, the focus was on securing domestic and regional sales to mitigate the effect of lower world and EU prices, it said.