World Sugar Price Reaches 28 Year High

Growing demand in Brazil for sugar to be turned into ethanol, coupled with a sharp fall in Indian production, have both prompted worries. Photo by prtc.net

The price of raw sugar has increased to its highest level since March 1981, as supply concerns grow.

Raw sugar futures added 3% on Monday, to 21,55 cents a pound, the BBC reported.

"The main problem is a deficit in sugar supplies," said Nick Penney, a trader with Sucden Financial, a firm that focuses on sugar trading.

Growing demand in Brazil for sugar to be turned into ethanol, coupled with a sharp fall in Indian production, have both prompted worries, he explained.

Sugar production in India for 2008-09 fell 45% year-on-year, according to a report by Sucden. And a "drastic fall" is expected for the coming Indian crop, it said.

India had less rain in the monsoon season and it was also uneven, damaging a number of agricultural crops.

There are concerns that the pending sugar crop, which will be ready around November, will be inadequate.

 

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