The global increase in sugar prices is unlikely to be sustained according to analysts

The global increase in sugar prices is unlikely to be sustained according to analysts

The Food and Agriculture Organisation (FAO) sugar price index rose by 14% from May to June as the market reacted to a predicted shortage in Brazil.

The index reached 359 points, albeit 15% below its thirty-year high earlier in the year, the FAO said today (7 July). The recent price rise reflects short-term demand against tight export supplies, notably in Brazil, it said.

"The sugar prices have been very volatile over the past month," FAO analyst Elmamoun Amrouk told just-drinks today. "This is basically due to the fact that we are in what we call the intro-season, between southern hemisphere production and northern hemisphere production. The reason for the big jump this month is because Brazil, the largest sugar producer in the world, is expected to produce a lower amount of sugar with respect to last year."

He added: "When you have a big player like Brazil saying that we might not be producing as much as last year, and with demand running ahead of production, then obviously the market will react and this is what happened."

Nonetheless, Amrouk said that the price rises are not likely to continue.

"This is for one main reason. That the other sugar producing regions are expected to have a larger amount. And we are talking about Thailand, Russia and also Europe, which was harvested for the summer. So the forecast for next season is that we will end up with a large production surplus. I don't think the increase is going to be sustained."