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The end-of-year surge in sugar prices lessened slightly yesterday, the sweet white commodity ending the year close to where it started.
As 2011 continued, some analysts had begun to expect the prospect of a supply glut to push prices down further from the peak reached around September. However, a drop in Brazilian production and floods in Thailand meant that these forecasts were not realised. The overall effect of the Thai floods on sugar cane appears to have been less than first feared, but Brazilian production is not expected to recover significantly during 2012, despite widespread plantation renewal. In addition, production from Russia, Ukraine and the EU is expected to be strong, providing further downward pressure on prices. Only rising production costs in Brazil and increasing use of sugar for ethanol production will help to alleviate the currently bearish outlook for sugar prices for 2012.
