Brace for even higher sugar prices, Europe’s top producer warns

European sugar prices will keep climbing as producers pass on higher costs and supplies remain tight, the region’s top sugar company said.

Farmers and processors are being squeezed by bigger energy bills and higher costs for important inputs like fertilisers. At the same time, output is being threatened by beet growers switching to crops such as grains and oilseeds that have become more profitable following the war in Ukraine.

That’s helped push a gauge of European sugar prices to the highest in four years. Increased costs will likely be passed onto food retailers and industrial food producers, according to Suedzucker AG. That could further push up food prices that are near a record and have contributed to soaring inflation.

Due to the “ongoing deficit in the sugar markets, we expect another price increase for the upcoming contract season,” Suedzucker spokesperson Dominik Risser said by email, referring to the German company’s sales to customers. He declined to elaborate on prices.

Demand is also expected to strengthen following the recovery from the Covid-19 pandemic, he said.

European white sugar prices reached 446 euros ($465) a ton in April, the latest data from the European Commission show. That’s up about 13% from a year earlier.

More stories like this are available on bloomberg.com