Drought threatens French sugar beet crop with no rain in sight

A prolonged drought is threatening sugar output in France, the EU's largest producer, with no rain forecast in key beet regions over the next two weeks, growers said, as concerns over European crops fuel a rally in sugar prices.

White sugar LSUc1 has gained nearly 10% in the past week, hitting a 9-1/2-month high on Wednesday, also supported by the El Nino weather pattern in Asia. Prices had slumped to a more than five-year low earlier this year on hefty supplies, hurting sugar makers' profits.

"Water is critical for sugar beets. If it does not rain in the coming two weeks it will be catastrophic," Franck Sander, the head of French beet growers' association CGB, told Reuters.

Meteo France sees no rain on the sugar beet plains around Paris and in northern France until at least July 14.

So far the situation is uneven, with beets showing dry leaves in some fields while others are holding up better, Sander said.

In its latest forecast released on June 26, the European Commission pegged EU sugar output in 2026/27 at 14.13 million metric tons, down 15% from 2025/26. This was due to a 9% fall in planted area and a 6.5% drop in yields.

French farmers are also worried about the spread of yellows disease after heavy aphid infestations earlier in the season, Sander said.

The virus ravaged crops in 2020 after the European Union banned some neonicotinoid pesticides used to protect crops, citing evidence they harmed bees.

France granted temporary exemptions in 2021 and 2022 after farmers and sugar producers said the ban threatened the industry's viability. The exemptions were later struck down by France's Conseil d'Etat after a ruling by the EU's top court.

Parliament is debating a new exemption this week as an amendment to a broader farm bill. The farm minister said she was not opposed to the measure but would prefer it to be debated separately to reduce the risk of the wider bill being rejected.

A final decision is expected later this month. However, it would come too late to affect this year's crop, as aphids typically infect plants in spring and symptoms emerge in summer.

-Reporting by Sybille de La Hamaide. Editing by Mark Potter/Reuters