Brussels is, "as a matter of urgency", investigating whether Europe can legally breach a World Trade Organisation ceiling on sugar exports, a move which could land an extra 1m tonnes onto the market, Agrimoney.com has learned.

Mariann Fischer Boel, the European Union agriculture commissioner has received legal advice on whether, "in these exceptional circumstances", the region can breach its export limit of 1.37m tonnes.

Ms Boel will by the end of the month, and potentially as early as next week, announce whether Europe, which according to beet growers is sitting on a sugar surplus of up to 1m tonnes, will release more of its stocks onto the market.

The revelation comes as sugar prices hit a fresh record high in London, and a 29-year top in New York, driven by continued concerns over supplies tightened by disappointing crops in top-two producers Brazil and India.

Export potential 

"I recognise that we are facing a very unusual situation on the sugar market this year," Ms Fischer Boel told a meeting of European farm ministers this week, noting the region's bumper sugar beet harvest.

"There are still large amounts of out-of-quota sugar left."

She was responding to a proposal from the Belgian delegate, although a commission spokesman said that France and "some others" had also supported the idea of raising exports.

Market rumour has suggested that Germany has also backed the move, David Sadler, at London-based Sucden Financial Sugar, said, noting "talk about 800,000 tonnes being made available".

"When France and Germany both get behind something, it can often swing their way," he added.

Fresh record 

In London, white sugar for March stood up $2.90 at $746.80 a tonne in late deals, after touching $760.10 a tonne earlier, a record for a spot contract.

New York raw sugar for March hit 29.45 cents a pound before easing to 28.82 cents a pound, down 0.16 cents on the day.

Market news on Wednesday included an estimate from Moscow analysis group Ikar that Russia will raise imports of raw sugar by 66% to 2.45 tonnes in 2010, and a fresh tender by Pakistan for 50,000 tonnes of white sugar.

Meanwhile, Indonesia said it had only just enough sugar stocks to last until mid-February, and had issued permits for 500,000 tonnes.

While the market was taking this data as bullish, the shipments already on their way to Indonesia suggested the country "is not going to run out", Mr Sadler said.