Hamburg, Aug 21 - Germany is likely to produce almost 800,000 tonnes of sugar over its European Union production quota this season as farmers hope to sell the surplus for biofuel production, the head of German sugar industry association WVZ said on Thursday.
"There are expectations of stronger demand for sugar to be used for bioethanol production because of high grain prices," WVZ Chief Executive Dieter Langendorf told Reuters.
"Several large bioethanol producers have indicated they will use more sugar products instead of grain so the prospects for sales look promising."
The WVZ estimates Germany will produce 3.519 million tonnes of white sugar from beet in the 2008/09 season, down from 3.82 million tonnes in the previous season.
But 2008/09 output will be around 800,000 tonnes above the EU sugar production quotas for Germany, which have been cut by the bloc under reforms to curb output in its heavily subsidised sugar sector.
"We had been expecting a fall in production because of the cut of around 20 percent in Germany's EU production quotas which start to take effect in 2008/09," he said.
"But plantings have not fallen by the same level as farmers are hoping for new sales markets for industrial sugar use, especially bioethanol production."
German farmers have planted around 371,000 hectares of sugar beet this year, a smaller-than-expected drop from the 406,000 hectares last season, he said.
In July, German bioenergy company Verbio said it had changed feedstock in its largest plant to sugar from grains. German bioethanol maker CropEnergies said in January it was using more sugar as a raw material because of high grain prices.
"The change to bioethanol output from sugar instead of grains is creating a new market for sugar," he said.
Overall, German sugar beet plantings were developing well, he said. But the sugar content of beets was lower than last year.
"Last year we had exceptionally favourable conditions with larger volumes of rainfall which raised the sugar content of beets," he said. "This year has been dryer and sugar content is lower on the year although we are on track for a good average compared to the last ten years.
"But the picture could change if we have large volumes of rain in the coming weeks."
It was too early to say when Germany's beet harvest would start this autumn, he said.
The refining season would be about three weeks longer than previously thought, he added, as several German refineries had closed because of the EU sugar market reform coupled with restrictions on subsidised sugar exports, which means the remaining refineries have to work longer, he said.