The low level of European Union sugar inventories is seeing the bloc's producers secure relatively high prices on supply contracts, despite weak world values, and indeed strong European output prospects.
Headline market dynamics would appear to suggest the potential for a sharp fall in EU sugar prices, given the prospect of the bloc's booming output in 2017-18, following the removal next month of production quotas, returning it to being a net exporter of the sweetener.
For white sugar, "export parity" - the price at which EU prices would on paper need to fall to become competitive on export markets - is some $300 a tonne, according to Credit Suisse, which said its calculations were based on world values with an allowance for tariffs and handling charges.
White sugar is priced in the EU at $497 a tonne, according to latest European Commission data, for May.
Yet sugar producers, in forward supply contracts, are achieving values far nearer to the existing EU values than those which the bloc should, in theory, face given its return to net exports for the first time meaningfully in more than a decade.
"The trade has suggested early contracting has been around E450-plus per tonne," Credit Suisse said.
While "down on last year", when contract prices came in at about E500 a tonne, the fall represents "nowhere near the collapse that might be implied by the export parity price".
Indeed, the erosion in prices has been "pretty modest in the circumstances" of the change in supply dynamics.
The bank noted estimates of a surge of 15% in beet sowings this year, for harvesting in coming months for 2017-18 sugar output.
The European Commission has forecast EU sugar production in 2017-18 at 20.1m tonnes, a rise of 19.6% year on year, and sufficient to turn the bloc into a net exporter of 1.3m tonnes - compared with net imports of 1.5m tonnes for this season.
The International Sugar Organisation two weeks ago forecast the EU being a net exporter of 1.31m tonnes next season, compared with net imports of nearly 1.0m tonnes for 2016-17.
However, sugar producers' hand in bargaining with buyers has been strengthened by the low levels of inventories heading into 2017-18, run down during a period of relatively high world prices which lasting until the spring.
"Sugar inventories in Europe are running very low as we head into the [beet] harvest," Credit Suisse said.
The commission forecasts stocks ending this season at a five-year low of 1.29m tonnes, and has actually forecast a further decline next season, despite the increased production, as import commitments dry up.
"Against this backdrop, the industry is standing firm on prices," the bank said.
Still, Credit Suisse highlighted that the price that producers secure "might still drift [lower] as the extra sugars hit the market", assuming no upsets to the beet harvest.
In fact, the bloc has seen "mixed weather" for beet production over the summer, with concern in particularly over drought stress to the French crop, the EU's biggest, according to Green Pool.
"However, as the summer moved on, more regular rainfall has improved the outlook," the analysis group said last week, as it raised by some 300,000 tonnes to 18.8m tonnes its forecast for the bloc's production in 2017-18.
Meanwhile, Green Pool lowered to 17.5m tonnes its forecast for demand, flagging competition from grain-based isoglucose, besides pressure from health concerns.
By Mike Verdin