By Maytaal Angel
LONDON (Reuters) - British Sugar, a unit of Associated British Foods (LON:ABF), is sourcing sugar from rival Tate & Lyle (LON:TATE) Sugars as well as from as far afield as Thailand, traders told Reuters, citing a supply shortfall that is keeping prices at record levels.
One UK-based trader told Reuters spot market prices for white sugar, a widely used food staple, remain north of 1,000 euros ($1,104) a tonne, creating headwinds for policy-makers trying to control food price inflation.
The surge has been partly driven by adverse weather that has prompted British Sugar to lower its sugar production forecast to 0.74 million tonnes for the 2022/23 harvest from 0.9 million previously.
"There is white sugar heading to the UK from Thailand for the first time in (my) living memory. Most likely (British Sugar) are looking at all origins (for supply)," said a second UK-based sugar trader.
British Sugar was not immediately available to comment. Tate & Lyle Sugars said it does not offer public comment on commercial sales or purchase contracts.
It is highly unusual for British Sugar, the only UK firm that processes sugar beet into refined sugar, to buy the sweetener from Tate & Lyle Sugars, but traders said it has little choice given a worsening local and global shortfall.
ICE (NYSE:ICE) raw sugar futures hit fresh 11-year highs earlier on Monday as world supplies continue to tighten following a disappointing 2022/23 harvest in Europe, as well as in top producers India and Thailand.
($1 = 0.9056 euros)