Sugar prices shot to four-year highs after a frost in Brazil cut the size of the cane crop in the world’s biggest producer, Report informs referring to The Wall Street Journal.
Prices for raw sugar futures have jumped 10 percent over the past month to trade at about 20 cents a pound in New York. Sugar prices haven’t been that high since early 2017 and have climbed more than 60 percent over the past year.
A cold snap in Brazil sparked the rally. Severe frosts struck areas of the sugar-producing Center-South region, including Paraná, São Paulo, and Minas Gerais in June and July. The unusual chill damaged the cane, stunted its growth, and reduced its sugar content. That prompted farmers to reorganize their harvest times and diminished a crop that had already dwindled due to a prolonged drought.
Sugar is one of several commodity markets to have experienced volatility due to rare or extreme weather events in recent months. Coffee prices also leaped following frosts in Brazil.
Traders’ estimates of how much raw sugar the Center-South region will produce this year vary between about 29 million metric tons and 33 million, down from 38.5 million last year.
Global production will fall short of consumption by almost 4 million metric tons, the second consecutive year of deficit, the ISO said in late August. It forecasts that stockpiles of sugar will fall from 98.3 million metric tons this month to 95.3 million next September.
There is no prospect of a sugar shortage, traders and analysts say. Rather, higher prices are likely to draw sugar out of India and into the world market.
“The world really needs Indian sugar,” said Michaela Helbing-Kuhl, an analyst at Commerzbank. Indian mills and farmers will export about six million metric tons this year, she forecasts.