World sugar prices continued to experience tremendous volatility in the lead up to this year’s Outlook. Prices in 2011 bounced between highs and lows as market fundamentals remained obscured under a shroud of conflicting information: early projections of an emerging global surplus and, at the same time, ongoing tight supplies and high prices in several markets. For example, adverse weather and low yields resulted in a large drop in production in Brazil, the leading sugar producing and exporting nation, after consecutive years of growth. Apart from sugar fundamentals, commodity markets in general have seen prices giving way to a generally weaker macroeconomic environment, rising oil and energy prices, and expectations of increasing supplies. World sugar prices started 2012 at lower levels and are expected to continue a downward drift over the remainder of the year as the global sugar market returns to a significant global production surplus in 2011/12 (October to September crop year) in response to recent high prices. This would follow a nearly balanced market in 2010/11 and large global deficits in the previous two years (). With world sugar production in the current season estimated at a new record level, some stock rebuilding is expected to commence. Overall, global stocks and stocks-to-use ratios will remain at relatively low levels at the beginning of the Outlook period.