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Sugar prices can sky rocket – India to import and Brazil to substitute gasoline with ethanol
International sugar prices can go through the roof in coming months and years. India, one of the biggest exporter of sugar reported today that it may have to import sugar due to low harvest output. In addition, Brazil, one of the largest producer and exporter may reduce export heavily because they plan to replace Gasoline in the cars with Ethanol by 60%.
According media sources from India, the Food and Agriculture Organization has forecast gloomy prospects for sugar production in India saying this could lead to a high import demand due to output shortfall.
"Sugar prices strengthened in 2004 and early 2005 reflecting a shortfall in supplies and which are forecast to continue in 2005, reflecting strong import demand and unfavourable production prospects in India," the Rome-based organisation said in its latest report.
It said preliminary harvest returns indicate a continued shortfall in supplies during 2005 largely due to a second consecutive year of unfavourable weather in Indian and rising import demand for both India and China, the FAO's ''Food Outlook'' journal said.
As far as cotton is concerned, it said reduced planting of the crop is expected from India, Pakistan, China, Brazil and United States which are the world's largest cotton producer.
"This could lead to some recovery in cotton prices," it said adding, "however, to induce a significant uptrend the shift out of cotton production would have to be so large that only a modest price effect may be anticipated".
The price decline in late 2004 was precipitated by a record output in these five major cotton producing countries which account for over 70 per cent of the global production.
Disclaimer: Trade at your own risk. We are not responsible for any loss. This is just an opinion. Trading in futures or stocks in the market is risky.
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