The company, called Tereos Commodities, will be based in Geneva and aims by 2020 to control 15 percent of the world's total white sugar trade, which currently stands at around 10 million tonnes a year.

That would be up from the 7 or 8 percent currently controlled by Tereos, Chief Executive Alexis Duval told Reuters in an interview.

The group hired Patrick Dean from global agribusiness group Louis Dreyfus Commodities to lead the new structure. Dean was formerly head of sugar distribution at Louis Dreyfus after also serving as head of white sugar trading.

Tereos, the world's fifth largest sugar maker, aims to lift its EU sugar output by 20 percent by 2017 to benefit from an average 2 to 3 percent rise in world sugar demand, he said.

EU sugar exports are currently capped at 1.35 million tonnes under a World Trade Organisation (WTO) agreement but should balloon after the cap expires.

"This activity's main purpose is to support our development strategy and gain market share. To do so it was important to have a strong commercial arm. But the activity is not intended to sell only Tereos products or we have a risk of not being competitive compared to our rivals," Duval said.

Tereos mainly produces beet sugar in Europe and cane sugar in Brazil. It is also present in Africa.

The new trading branch would focus on expanding activities in North Africa, the Middle East and Asia, where it already exports some sugar from Brazil but could benefit from European sugar exports that will be liberalised in 2017.

Claudiu Covrig, senior agricultural analyst with Platts Kingsman, said he believed Tereos could potentially acquire the targeted 15 percent of global white sugar trade, but progress would be linked to prices of sugar compared to alternative crops.

"Everyone is betting on a comeback in European sugar exports. If sugar in Europe is cheap, they (Tereos) could compete on the world market," he said.

TRADING ARMS

In 2010, Tereos, which also produces ethanol and starch, separated its sugar cane and cereals activities into a branch called Tereos Internacional (>> Tereos Internacional SA), which is listed in Sao Paulo.

Its original activities of sugar beet processing in Europe remain within the unlisted cooperative, which groups 12,000 French farmers.

Duval did not rule out that Tereos Commodities could later expand to ethanol.

Other sugar groups have also created trading arms.

Germany's Suedzucker (>> Suedzucker Mannheim Ochsenfurt AG) the EU's top sugar producer, bought a stake in London-based EDF Man in 2012 to widen access to markets outside Europe.

WEAK 2014 RESULT

Duval said the group's results would be "much lower" this year, mainly hit by the fall in sugar prices in Europe where a bumper beet crop is expected this winter. He declined to give further details.

Rising stocks of sugar helped to drive global white sugar prices to a five-year low of $384.90 per tonne in September, although they have since recovered slightly to around $420.

"We are in a cycle of very low prices which affect all levels, notably in terms of financial results, which are sharply deteriorating, especially among European players," Duval said.

Suedzucker warned it may not reach its full-year profit target as the EU sugar and ethanol markets continued to worsen. Associated British Foods (>> Associated British Foods plc) said falling sugar prices were set to hold back earnings growth in the next two years.

(Additional reporting by David Brough; Editing by Andrew Callus and Keiron Henderson)

By Sybille de La Hamaide