Content ID

334937

UPDATE 1-Tereos raises beet prices by 40% amid soaring EU sugar markets

(Adds sugar beet union reaction)

PARIS, Oct 19 (Reuters) - France's largest sugar and ethanol group Tereos raised the price at which it will buy sugar beets from its cooperative members by 40% from last year, aiming to pass on improved results amid soaring European sugar markets.

In a letter sent to its 12,000 cooperative members on Tuesday, Tereos said that for the 2022 harvest it would pay 41.85 euros ($40.88), premium included, per tonne of sugar beet based on a sugar content of 16 degrees, up from 29.90 euros last season.

The price hike was linked exclusively to improved industrial and commercial performances at Tereos' French sugar business unit, it said, adding it had recorded a significant rise in its average selling price compared to 2021.

Tereos had previously said it would do "at least as much" as its competitors in France. Cristal Union and Suedzucker's branch in France, Saint-Louis Sucre, announced prices of 35 euros and 35.50 euros per tonne respectively.

Sugar beet growers union CGB welcomed Tereos' move and called on other sugar producers in France to consider rising their purchase prices.

"This announcement comes at the right time as yields for the 2022 harvest are expected to be down sharply compared to the five-year average and beet production costs are experiencing record inflation, driven in particular by fuel and fertilizer prices: nearly 15% in 2022 and 35% anticipated in 2023 compared to their 2021 level," CGB said in a statement.

European sugar prices are trading at record highs, nearly three times the levels seen a year ago following extreme weather and a surge in energy costs, which has raised concerns in the baking and confectionary industries.

The sugar beet harvest, which is in full swing in France, is showing disappointing results after a severe drought hampered crop development. The farm ministry earlier this month said it expected the national yield to fall 6% compared with the five-year average.

Tereos said it expected yields to be close to the five-year average, although with mixed results, and to record an average sugar content of 18.2%.

Tereos is the world's second-largest sugar producer by volume thanks to its sugar cane activities in Brazil.

($1 = 1.0238 euros) (Reporting by Sybille de La Hamaide; Editing by Paul Simao and Mark Potter)

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