Originally published January 25 2011
Global sugar shortage looms, price hikes expected
by David Gutierrez, staff writer
(NaturalNews) Global sugar prices are at their highest level in 30 years and may rise higher as fears of a worldwide shortage loom.
The high prices are part of a larger trend of high food prices caused by loss and degradation of arable land, climate uncertainty and price speculation. In the case of sugar, prices were pushed to record highs by a drought in Brazil, leading to a 30 percent drop in sugar cane production.
Brazil is the world's largest sugar exporter, responsible for roughly half of the global market. Analysts are predicting an even smaller harvest next year due to a widespread need to replant aging crops.
"Anything affecting Brazil will have a direct impact on trade flows," said sugar trader Jean-Luc Bohbot of Sucres et Denrees.
Industry and market followers are also carefully watching India, which is expected to have a large sugar harvest this year. The government in New Delhi has not yet announced, however, how much of the crop it will allow to be exported. Analysts have predicted between 1 million and 2 million metric tons, and any lower amount or any delay in starting exports could push prices even higher.
"They need to start selling additional volumes by mid-December, otherwise the hole in the market is getting wider," said Peter de Klerk of British sugar company Czarnikow.
Concern over the instability of the global sugar supply caused raw sugar futures to rise 135 percent in a single day in November.
Across the world, sugar is a major source of cheap (albeit empty) calories, and any rise in price will push up the cost of other foods, as well. In the United States, high sugar prices could lead industry to start favoring the other major U.S. sweetener, high fructose corn syrup.
High fructose corn syrup is increasingly coming under scrutiny as potentially being even more additive than regular sugar.
Sources for this story include: http://www.ft.com/cms/s/0/43cfbb7a-e6b2-11df....
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