Egypt’s Focus on Local Sugar Is Bad News for European Exports

(Bloomberg) -- After a drought and crop disease, add a shrinking export market to the list of headaches for the beleaguered European sugar industry.

The European Union -- which saw its white-sugar shipments slump to an almost decade-low last season -- now faces the prospect of losing a major export market as Egypt bolsters local output and cracks down on imports. The North African nation was the EU’s second-biggest export market just two years ago. Sales there dropped to a four-year low last season and risk falling even more.

“Egypt was one of the main destinations for EU exports and the Egyptian government’s decision to restrict imports means that EU exporters likely have look to other destinations,” said Ben Seed, an analyst at supply-chain services company Czarnikow Group.

That would be another blow for the EU, the world’s third-largest sugar producer, which has seen output fall in recent years as low prices discouraged planting and as drought and a crop virus damaged harvests. Still, smaller supplies could ease a global surplus next year, which JPMorgan Chase & Co. forecasts will total 3.8 million tons.

Egypt expects its beet-sugar output will rise 16% to 1.45 million tons next year as farmers expand plantings. The government is also increasing investment in state-owned Egyptian Sugar and Integrated Industries to boost production capacity in the coming years and help the domestic industry become self-reliant in the future, said Ahmed Abo Zaid, an official at Egypt’s supply ministry. It’s currently about 75% self-sufficient, he said.

The nation has also extended its sugar import ban through November at least to protect the local sector after the coronavirus pandemic sent sugar prices down earlier this year and cheap imports flooded into the country, Zaid said.

©2020 Bloomberg L.P.