Europe is on track for a bumper sugar production – but that will not go far in solving the global shortage of the sweetener because of limits on the levels the region can export.

European Union sugar output will jump by 1.9m tonnes to 15.5m tonnes in 2009-10, thanks in the main to record beet yields, a report out of America's Brussels office said.

Combined with imports from developing world countries being given free market access, and stocks left over from last year, the EU will have sugar supplies of 21.2m tonnes – 4.65m tonnes more than its consumption needs.

Processors' dilemma

However, it will only export less than 1.5m tonnes of that, thanks to World Trade Organisation restrictions of 1.37m tonnes on out-of-quota shipments.

Indeed, the excess production creates a "dilemma" for processors, which if they sell sugar into intervention, would be letting it go way below market prices, while if they keep it, will erode next year's quota allowance, the report said.

A further alternative, of conversion into ethanol, looks "uneconomical" because of the low price of cereals, the major source of bioethanol in Europe.

Record yields 

The report credited the higher beet production to a rise in plantings, record yields and high sugar content, notably in north western Europe.

In Belgium, test data show sugar content has jumped from 17.8% to 19.0%, and in France from 18.8% to 19.5%, the best results anywhere in Europe for at least four years.

Hopes of higher output contrast with a second poor harvest forecast for India, the world's second largest producer, following a weak monsoon.

In Brazil, the world's biggest producer, rains have until recently scuppered plans for ramping up production, hampering harvesting besides lowering sugar content.

A dry spell helped mills crush 28.9m tonnes of cane in the first half of November, up 11% on the same fortnight last year, industry group Unica said on Tuesday.