Isoglucose: what impact for the sugar market? · PDF file · 2014-04-15do not produce isoglucose. x x x x x x x x x x x x x x x x x x x x x x x x xx ... This presentation and its

©LMC International 1 8 April 2014

Isoglucose: what impact for

the sugar market?

April 2014

Seminar Geneva 8th

Kingsman EU Sugar


• Even without an increase in area, beet processors will

be free to sell out-of-quota sugar production in the EU.

This has averaged 2-3 million tonnes in recent

years.

• This sugar will compete with existing sources of supply

– quota sugar, imports and isoglucose.

• The winners and losers of this competition will depend

on producers’ costs.

What will happen when quotas go?


Some sugar and isoglucose producers want to

expand, but it is not clear if any plan to leave the

sector.

Everyone has a plan and everyone plays a part in

their plan

This suggests the EU will produce large surpluses

immediately after quotas are removed.

But, the outcome will be more

complicated than this …


Isoglucose currently represents a tiny

share of the EU starch industry’s total

output.

• Around 17 million tonnes of grains (maize and

wheat) are processed to make starches and

sweeteners.

• Of this, roughly 10-11 million tonnes (60-65%) go to

produce syrups.

• But isoglucose is made from less than 1.5 million

tonnes (<10% of grains processed).


This is because quotas also ensure

isoglucose represents a small share of the

sweetener market. Composition of EU supply

Beet sugar

81%

Isoglucose

4%

Imports

15%


Isoglucose quotas are concentrated in

Central and South East Europe.

Quota & over-quota isoglucose production by member state

0 50,000 100,000 150,000 200,000 250,000 300,000

Hungary

Belgium

Bulgaria

Slovakia

Germany

Spain

Poland

Italy

Portugal

tonnes, dry basis

Isoglucose quota production Isoglucose over-quota production


Quotas are also quite dispersed by company

And, they include some sugar producers.

Current allocation of isoglucose quotas (‘000 tonnes, dry basis)

Company: Syral Cargill Hungrana Roquette Eaststarch Copam Total

Ownership: Tereos Cargill Agrana/Eaststarch Roquette Tate & Lyle/ADM Copam

Belgium 115 115

Bulgaria 89 89

Germany 57 57

Hungary 250 250

Italy 22 11 32

Poland 43 43

Portugal 13 13

Slovakia 68 68

Spain 23 31 54

Total 115 144 250 42 157 13 720


But there are many starch plants that

do not produce isoglucose.

0

1

2

3

4

5

6

7

1

Maize-based starch plants Wheat-based starch plants

Wheat and Maize-based starch plants Plants with isoglucose quota


Can isoglucose compete with sugar?


• Size of the liquid sweetener market in the EU as a whole

and by region.

• Net cost of cereals is a major cost component.

• New capital versus sunk capital.

• The willingness of end-users to switch from sugar.

There are several issues that dictate

how much isoglucose will be produced

after quotas go.


Demand is heavily concentrated in the

North West and roughly 35-40% is used in

liquid applications. Regional sweetener demand

0 2 4 6 8 10

Centre South

Baltics

South East

Iberia

Mediterranean

Centre North

North West

Million tonnes, white sugar


Cereals are cheapest where market potential

for is smallest and current output largest.

Raw material prices and costs (net of processing co-products)

0

25

50

75

100

125

150

175

200

225

Maize Wheat Wheat Maize Maize Wheat Maize Maize Maize

SouthEast

NorthCentral

Nordic SouthCentral

NorthCentral

NorthWest

Italy NorthWest

Iberia

€p

er

ton

ne


• Starch processors will have to invest to increase output,

because there is little surplus capacity in the sector.

• But, the beet sector has capacity to sell 4-5 million tonnes

more sugar in the EU market using existing capacity:

2-3 million from current out-of-quota output.

Up to 2 million by lengthening the season.

• End-users must also be willing to switch from sugar,

raising uses about price, product formulation, consumer

perception, etc.

New capital versus sunk capital & will

end-users be willing to switch?


Conclusions


Many plants are in areas where beet is competitive

and sweetener markets are in surplus or balanced.

Legend: Surplus Deficit Broadly balanced

Maize-based starch plants Wheat-based starch plantsWheat and Maize-based starch plants Plants with isoglucose quota


• In my opinion, yes there will be some expansion.

• How much is hard to say, but 1-2 million tonnes is quite

possible.

• This will add to the competitive pressures in the market,

especially as low-cost beet sugar producers want to

expand to utilise their assets fully.

• This suggests that the market will be over-supplied until

production adjusts … a lot of this surplus could be

exported.

Conclusions: more isoglucose?


The scale of the potential surplus is huge,

so some plans will have to adapt.

EU market balance: current (quota) and expansion potential

0

5

10

15

20

25

Beet sugar Isoglucose Imports Demand Over-quota Beet sugar Isoglucose

Quota Beet Expansion

Mil

lio

n to

nn

es,

wh

ite s

ug

ar


Thank You

www.lmc.co.uk

../../www.lmc.co.uk.htm


This presentation and its contents are to be held confidential by the client, and are not to be disclosed, in whole or in

part, in any manner, to a third party without the prior written consent of LMC International.

While LMC has endeavoured to ensure the accuracy of the data, estimates and forecasts contained in this presentation,

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LMC International can accept no liability regarding information analysis and forecasts contained in this presentation.

© LMC International, 2014

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Isoglucose: what impact for the sugar market? · PDF file · 2014-04-15do not produce isoglucose. x x x x x x x x x x x x x x x x x x x x x x x x xx ... This presentation and its