Germany is on course to produce some 4.4 million tonnes of refined sugar this season, up from 3.7 million tonnes last year and 4.1 million tonnes forecast in November, Dieter Langendorf said.

This would mean the country will produce about 1.51 million tonnes of sugar above its EU production quota of 2.89 million tonnes.

Under EU rules for sale of subsidised crops, such sugar above EU quotas cannot be sold for food but can be marketed for non-food industrial use such as chemicals and bioethanol but only exported with special permission.

There was a limit to the volume of non-quota sugar which could be marketed for industrial use while exports were restricted under World Trade Organisation (WTO) rules, Langendorf said.

"No one had expected that production would be so high and this is likely to mean that beet plantings will be reduced," he said.

Bioethanol had been a major market for non-quota sugar in recent years but there was major competition from grain, he said. Last season, German farmers also produced about one million tonnes of sugar above their EU quota.

"We must now wait to see how much the additional export volume of 500,000 tonnes from the EU will help relieve the market," he said.

On January 27, the EU said it would allow export of an extra 500,000 tonnes of non-quota sugar in the current 2009/10 market year, despite strict WTO limits.

"Without the extra export possibility we would have been facing a plantings reduction of about 10 percent, now we are expecting a cut of about five to six percent," Langendorf said.

"The EU decision is welcome but the validity of the licences is restricted and it will be a logistic challenge to meet the timeframe."

The German harvest and refining season had progressed well despite taking about a month longer than previously after the closure of several refineries following the EU's sugar market reforms, Langendorf said.

The extra production followed exceptional beet yields, high beet sugar content and an expansion of plantings, he said.

"This year was something of a test for us to see how work would progress in a period with deep frosts but we have seen that longer refining periods are possible," he said.

Source: Reuters, flex-news-food.com