There is too much talking in mass media that the global market of sugar can become oversupplied after 3 years of deficit. Indeed, Brazil and India (the world’s major sugar producers) may well oversupply the global market of sugar once they increase their production.
The prices have recently declined from 30 cents down to 24 cents. Some experts expect sugar to depreciate down to 22-20c. According to , sugar price can decline only in mid 2012 when Brazil starts refining the new harvest of sugarcane.
The oversupply supposition needs confirmation. So far, India is the only place where the sugar market is obviously oversupplied. India is planning to export 1M tons of sugar to get rid of the pressure caused by the oversupply. At the same time, China is willing to import 1M of sugar from India, thus neutralizing the excessive supply.
Most Mexican sugar refineries suspended their work due to heavy rains. This factor supported the prices. However, the weather conditions have improved and we will probably see the price retracing back.
Moreover, while the prices are low, Brazil decided to produce ethanol. This factor also contributes to the temporary rally.
