Sugar

In the lead up to this year’s Outlook, the world sugar market was basically out of sync with developments in other commodity markets which experienced rapidly rising prices stoked by fears of pending food shortages with permanently rising demand and tight supplies. This market psychosis also spilled over to sugar to some extent, although with adverse fundamentals of two consecutive large world crops and a large global surplus, sugar prices were outperformed by most other commodities in 2006 and 2007. The changes in sugar prices that occurred were linked by the market to mainly non-sugar factors. Since the second half of 2008, however, many of these other commodity prices have imploded by 40-50% from their mid-year peaks. In contrast, the world indicator price for raw sugar (Intercontinental Commodities Exchange No. 11, spot, f.o.b. Caribbean ports) and white sugar (Refined sugar price, London Euronext, Liffe No. 5, f.o.b., price, Europe), showed a comparatively moderate development throughout 2008, although with considerable within year volatility. In early 2009, world sugar prices have rallied with their re-connection to fundamental factors based on an emerging, medium-size, global deficit as the constructive force behind near term price changes.