Opinions Focus
- Russian and European beet harvests are underway.
- Russian beet molasses are cheaper than EU molasses.
- European customers are declining to buy Russian commodities.
The beet molasses is operating in two tiers; with Russian origin beet molasses trading at discounts to EU prices.
The EU and Russian sugar beet harvests are fully underway and will be reaching the peak of production. The crops in Europe are smaller as expected due to the continent-wide drought over the summer 2022 which has resulted in smaller beets, less sugar and less molasses. Demand has fallen in some markets, with less beet exported for animal feed and a pause in production of a French fermentation plant. The fall in demand has not been sufficient to offset the fall in supply resulting in persistently higher prices in the EU.
Russian prices have been trading a significantly lower level, although there are no specific sanctions against Russian beet molasses, the majority of European customers are declining to purchase Russian origin commodities. There are also restrictions in shipping from the Black Sea, not just in terms of war risk, but in terms of insurance and banking services. The main destinations for Russian origin beet molasses have been countries outside the EU, with shipping limited to smaller vessels which are servicing a Mediterranean customer base. This situation is unlikely to change a great deal in the next few months, shipping and sanctions on Russia will remain a serious impediment to exports.
Looking to 2023, the next major exporting opportunity will be from Egypt. Indications so far are that the crop will be slightly delayed due to later beet plantings.
