Sugar price on the Up Trend

Sugar price is on the up trend. I can forego cakes, ice cream, and other sweets but not my coffee with sugar.

For more story on the global sugar shortage brought by adverse weather, read below:

Sugar Shortage to Exceed Forecast on Adverse Weather

Sugar Shortage to Exceed Forecast on Adverse Weather

By Thomas Kutty Abraham

A global sugar shortage, which drove prices to the highest level in three decades, will be 43 percent more than estimated as adverse weather crimps crops in Mexico, China and Thailand, broker Jonathan Kingsman said.

The shortfall may expand to 11.92 million metric tons in the season ending April 30, compared with 8.32 million tons forecast in October, said Kingsman, managing director of the Switzerland-based company told a conference in Dubai today.

Kingsman SA joins the International Sugar Organization in predicting the global deficit to persist for a third year. Raw- sugar reached a 29-year high on Feb. 1 after more than doubling in 2009 as adverse weather curbed production in Brazil and India, the top producers. The shortfall may exceed 7.25 million tons forecast in November, the London-based ISO said Feb. 5.

“It appears that global stocks will remain extremely tight into 2011, given the extraordinarily tight situation in the market,” Tom McNeill, a senior partner and head of research at Kingsman, said in a statement issued before the conference.

India, the biggest user, may need to import an extra 2.5 million to 3 million tons this season to meet a 7 million ton deficit, Kingsman said in an interview yesterday. Pakistan, Asia’s third-biggest consumer, which stopped taxing imports, plans to buy 1.25 million tons by June.

China, the biggest consumer after India, may have a deficit of 3.3 million tons this year after drought and cold weather cut yields, the Guangxi Bulk Sugar Exchange Center said last month. Vietnam may import 100,000 tons to stabilize prices, Tuoi Tre newspaper reported. Thailand, the second-biggest exporter, may produce 7.2 million tons in the year started in November, less than the previous forecast of 7.62 million tons, the country’s industry regulator said Feb. 3.

‘Large Quantities’

“A lot of buying is yet to come,” Kingsman said. “India, Pakistan and Vietnam need large quantities.”

Global sugar output may total 150.93 million tons, trailing demand of 162.85 million tons, he told the conference today.

Still, the world may return to a surplus of about 3.99 million tons in the 2010-11 season as production increases in Brazil and India, Kingsman said. Global sugar stockpiles will remain tight as users rebuild inventory after two years of record deficits, the brokerage said.

“Although we’re expecting production to recover in India and Brazil, we also expect consumption to get back on track as economies grow,” Kingsman said. “This will provide some relief to importing countries and allow recovery in depleted stocks.”

Raw-sugar futures for March delivery declined 5.3 percent to 26.17 cents a pound in New York on Feb. 5, the most since Oct. 9, as a rally in the dollar eroded the appeal of commodities and a slump in equities revived concern that the economic recovery may stall. The Reuters/Jefferies CRB Index of 19 raw materials slipped to the lowest level since October.

The slump in sugar, a result of selling in commodities by institutional investors, hasn’t changed the fundamentals of the sweetener as import demand will exceed exports, said Kingsman.

Editors: Ravil Shirodkar, Richard Dobson

To contact the reporter on this story: Thomas Kutty Abraham in Dubai at +91-98672-55201 or tabraham4@bloomberg.net

To contact the editor responsible for this story: James Poole at +65-6212-1551 or jpoole4@bloomberg.net