What is the new forward index-linked contract?
British Sugar and NFU Sugar have agreed to pilot a new forward index-linked contract that allows growers to contract/sell some of their sugar beet tonnage in advance of annual price negotiations and potentially benefit from global sugar price movements.
This new option is available for the 2027/28 crop year.
The existing one-year index-linked contract already lets growers contract beet tonnage indexed to global raw sugar prices and the GBP/USD exchange rate.
This new pilot goes further by allowing growers to view index-linked beet prices before committing tonnage and creates the opportunity to lock in a 2027/28 index-linked price before annual contract negotiations conclude.
Growers can contract beet at any time up until the contracting window for the 2027/28 crop closes.
Growers can price on CZ app either as soon as the novation process is complete (typically within 24 hours), or at any time up to one month before the relevant futures price expires. This means that forward sales are delinked from one-year contract timing.
The price updates every 15 minutes and can been viewed via the CZ App trading platform.
This pilot is likely to be best suited to growers who are interested in actively managing price risk.
Uptake and feedback from the pilot phase will be used to guide how this new model is developed in the future.
How do I take part?
Interested growers must pre-register for the pilot scheme. Doing so will give you visibility of the index-linked beet price for 2027 on the CZ app trading platform and allow you to price quickly if you wish. By pre-registering, growers are not contracting or committing to make beet sales.
All growers who have signed up to an index-linked contract in the past will be pre-registered automatically.
If you have not previously been on an index-linked contract and would like to pre-register for the pilot scheme, please contact the British Sugar Services team on freephone 0800 090 2376 or email [email protected].
Creating your account
This is a brand-new offering for growers, meaning British Sugar has built a bespoke web platform for this new index-linked model.
This means growers participating in the pilot will need to create an account and set a password before they can contract any tonnage onto it.
In order to view prices, participating growers will also need to create an account with Czarnikow, if they don’t already have one.
It is strongly recommended that growers set up an account with Czarnikow in advance of the pilot scheme launching. The grower onboarding process may take up a number of days to finalise, which could result in growers missing out on the beet price they were seeking to take advantage of.
Setting up an account does not commit growers to contracting beet under the scheme.
Start dates
The pilot for the 2027/28 crop will launch on 2 March 2026, when growers will be able to sell as far ahead as October 2027 for crops drilled in spring 2027.
How does the pilot differ from the existing one-year index-linked contract?
The formula used to calculate the beet price is essentially the same as under the one-year index-linked price:
Beet price (£/adj. tonne) = (ICE No.11 Oct 27 price * 22.0462 / £/US$ Dec 27) - discount service fee
6.25
The difference is that under the current one-year index-linked contract, the initial beet available on CZ app after the contract goes live is the same as the fixed contract price agreed by NFU Sugar and British Sugar during the annual negotiation.
The beet price then moves up and down with the No.11 sugar price and the forward £/US$ exchange rate until the pricing window is closed at the end of August.
Under the forward index-linked pilot, the launch price is not agreed in advance. Instead, it is the discount factor that is negotiated.
For the pilot, which is a tranche of 50,000t, the discount has been set at £160/t but this may vary for new tranches that are launched in the future. Once agreed, the discount applied to each tranche remains fixed, unless a change is agreed by NFU Sugar and British Sugar.
The diagrams below summarise the main differences between the two systems in terms of when contracting and pricing takes place.
- Under the one-year contract, pricing takes place after the contract window is closed until the end of August each year.
- Under the forward index-linked contract, the contracting window is much longer and is open from the launch of the tranche until the contracting window for the relevant year closes. Pricing can continue until approximately one month before the relevant sugar futures contract expires.
Contracting and pricing for the one-year index-linked beet contract
Contracting and pricing for the forward year index-linked beet contract
Can I change my mind once I commit tonnage to be sold?
There is no cooling-off period for beet sold under this contract type. Once tonnage is committed it cannot be reversed.
What are the benefits?
- Ability to sell sugar beet forward, similar to other crops such as wheat.
- Opportunity to lock in attractive prices as and when they become available.
What are the risks?
- The price is fully market-driven and can fluctuate every 15 minutes.
- There is no fixed element to the price.
- Growers need to be confident in their costs of production so they know they will make money at the price they lock in.
How much tonnage can I commit under the pilot?
In total, up to 50,000 t of sugar beet can be included in the pilot.
Growers will be able to commit up to 10% of their CTE (Contracted Tonnage Entitlement) to this contract type. This limit will be reviewed as the pilot progresses.
Tonnage can be committed in increments of 50t.
When will forward index-linked tranches close?
Each tranche is available for growers to sell until it is exhausted or the contracting window for the relevant year closes. After this point, growers will not be able to contract additional tonnage against tranches that will be delivered in the year for which contracting has completed.
However, growers can continue to price any tonnage already contracted on CZ app until approximately one month before the relevant futures price expires. If an annual index-linked price for the relevant year is agreed, it will run concurrently to any previously agreed tranches.
Tranches can close early. If British Sugar sees that there are exceptional circumstances (eg, a war leading to a sharp spike in natural gas prices), tranches can be withdrawn thereby preventing any further beet from being committed against that tranche.
British Sugar will give growers 48 hours’ notice before a tranche is withdrawn and will give a full written explanation within seven days of removing the tranche to NFU Sugar.
In the event that growers do not contract enough beet to fill the tonnage that has been made available on a tranche, the tranche will simply close on the agreed date with the sales that have been made attached to it.
Remaining tonnes will form part of the tonnage that is contracted under the annual contract negotiations that take place each year. There is no compulsion for growers to fill tranches that are launched.
Why is the launch price for the forward index-linked price so low?
At the time of launch (February 2026), No.11 sugar prices are currently trading close to five-year lows and the UK Pound is strong against the US Dollar. This means that the forward index-linked price is very low.
However, there is no obligation on growers to contract/sell any sugar beet on the pilot. If prices stay low and growers do not contract any beet, the tranche will simply close with no beet sales attached to it. However, if the market situation changes and prices rise to a more attractive level, there is an opportunity for growers to lock in their beet price irrespective of what is agreed between NFU Sugar and British Sugar during 2027/28 contract negotiations.
In this sense, no commitment is made until beet is contracted with British Sugar.
Historic pricing
The illustrative chart below shows what the index-linked beet price would have been for the October No.11 contracts since 2022. The contracts are presented side-by-side over their three-year lifespan and converted into pounds using the corresponding forward exchange rate. For all contracts, the discount is assumed to be £160/t (the level agreed for this pilot).
Under the one-year index-linked beet price, the beet price is linked to October futures approximately one year before its expiry. The forward index-linked scheme will give growers access to sell beet two or potentially three years before expiry as well.
The chart below shows an illustration of the prices that would have been available had this scheme been in place over the last few years (in all cases the discount factor used is £160/t):
- In some years, pricing beet early would not have been attractive. For example, for the October 2022 and 2023 contracts, beet prices were relatively low in years one and two, only rising to more attractive levels in their final year.
- However, in other years, there were periods when more attractive prices could have been locked in early. For example, the October 2024 contract offered prices above €35/tonne during year two of its lifespan. Similarly, October 2025 offered the best prices during its first two years.
The conclusion from this is that there will be some tranches that do not offer attractive prices to growers during their lifespan.
However, the volatility of the world market means that there are others that will. The idea of the scheme is to offer growers the opportunity to lock in attractive prices when they arise but give no compulsion to contract beet when prices are not.
How quickly can I lock in a price?
Subject to pre-registration having been successfully completed in advance, Czarnikow will provide best endeavours to ensure that beet that has been contracted on British Sugar’s dedicated web portal is available to price on CZ app within 24 hours from beet having been contracted with British Sugar
When to price your beet
The expectation is that growers will only contract beet when the forward index-linked beet price has reached a level where they are happy to lock in prices.
However, once tonnage is committed to British Sugar, growers can price on CZ app either as soon as the novation process is completed or at any time up to one month before the relevant futures price expires.
Under which agreement will forward beet sales be governed?
Forward beet sales are governed by a specific IPA (Inter-Professional Agreement) which refers to the latest agreed annual IPA.
Transport allowance and other contract features
Forward beet sales made under the scheme are eligible for the transport allowance subject to the transport mileage cap and late delivery allowances as per the terms of the most recently signed IPA for non-forward beet sales.
Forward beet sales are eligible for Yield Protection, frost insurance, cash advance, and other features of the IPA if they are offered in the year in which the beet is due to be delivered.
What if I grow less beet than I have contracted?
Any beets delivered under the forward and annual index-linked contracts will be delivered first followed by any other beet under the terms of the IPA.
But if you do not deliver the beet that you have contracted under the index-linked contract, there is a risk of breach of contract.
Forward index-linked beet vs negotiated price
There is no link between forward index-linked beet price and the price that is negotiated annually between NFU Sugar and British Sugar.