Commodities outlook 2015: Sugar beet

Sugar beet faces a dramatic reduction in price for 2015 as high stocks and record yields in 2014 led British Sugar to cut contracts by 9%.

“At current prices, growers must be sure of producing sufficient yields to make a profit,” says Andersons director Nick Blake.

“I would suggest anything below 70t/ha requires further examination.”

See also: Sugar beet outlook uncertain despite ‘terrific’ start to harvest

The 2016 crop, contracted in August 2015, will be the last production year that prices will be decided in their current form, with quota, he adds.

“Quota will end in September 2017 and there needs to be a major rethink in the contract and mechanism to provide growers with transparent pricing and more flexible terms.”

Growers must understand their break-even point to prepare for a future without quota, he warns.

“Some people may stop growing sugar beet altogether, while others are likely to expand.”

However, there are now alternative outlets, including anaerobic digestion plants. “In some areas, these may be able to offer competitive terms, including improved logistics.”

 

Outlook

  • 9% cut in British Sugar price this year
  • Loss of quota in 2017 likely to herald further changes
  • New buyers could prove more competitive

Business pointers

  • Understand break-even point
  • Consider benefit or otherwise of joining BS haulage scheme
  • Ensure sufficient investment in crop husbandry to maximise potential

Futures markets and commodity risk management online course:

  • Risk management strategies for a more predictable financial performance
  • Educated conversations when collaborating with your advisors
  • Negotiate better prices with your grain merchants

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