In an interesting article in today's Financial Times, it is argued that removing the EU's hitherto chronic sugar surplus should ultimately mean a return to a premium prices. "The worst of the pain is over", Julian Lakin of Mirabaud Securities is reported saying, and that pain has been "much worse than anyone expected" when the regime was originally set out, but "at least the future of ABF's and Tate's EU refining looks more assured than it did then", he adds.
In June 2008, the European Commission reported on its website that the average sugar price in the European Union (ex-work prices, standard quality, in bulk or big bags in March 2008) was €604.00 per tonne, a reduction of around 17% already compared with pre-reform average prices. In accordance with the sugar reform, the Commission has now set up an information system on prices, including a system for the publication of the price levels for the EU sugar market. According to the FT article, analysts in the City of London are asking whether the old premium to the EU price will return when the reference price drops to €404.4 per tonne. "That is the $64,000 question," Charlie Mills, analyst at Credit Suisse, says.
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