©LMC International 1 8 April 2014
Isoglucose: what impact for
the sugar market?
April 2014
Seminar Geneva 8th
Kingsman EU Sugar
©LMC International 2 8 April 2014
• 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?
©LMC International 3 8 April 2014
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 …
©LMC International 4 8 April 2014
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).
©LMC International 5 8 April 2014
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%
©LMC International 6 8 April 2014
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
©LMC International 7 8 April 2014
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
©LMC International 8 8 April 2014
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
©LMC International 9 8 April 2014
Can isoglucose compete with sugar?
©LMC International 10 8 April 2014
• 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.
©LMC International 11 8 April 2014
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
©LMC International 12 8 April 2014
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
©LMC International 13 8 April 2014
• 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?
©LMC International 14 8 April 2014
Conclusions
©LMC International 15 8 April 2014
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
©LMC International 16 8 April 2014
• 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?
©LMC International 17 8 April 2014
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
©LMC International 19 8 April 2014
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,
any decisions based on them (including those involving investment and planning) are at the client’s own risk.
LMC International can accept no liability regarding information analysis and forecasts contained in this presentation.
© LMC International, 2014
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