Business | Markets
Sugar prices turn sour for consumers
With the world's dominant sugar producer and exporter Brazil diverting its sugarcane crops to produce ethanol to provide cheaper fuel for motorists, sugar prices may be turning sour for consumers.
- By Shakir Husain, Staff Reporter
- Published: 00:00 January 25, 2006
Dubai: With the world's dominant sugar producer and exporter Brazil diverting its sugarcane crops to produce ethanol to provide cheaper fuel for motorists, sugar prices may be turning sour for consumers.
Coupled with a general rise in sugar consumption, the energy factor in sugarcane use is affecting supplies of sugar, an industry expert said.
Sugar prices have risen from $270 per tonne at the start of 2005 to above $400 per tonne this week.
In the UAE, a kg bag that used to cost about Dh50 is now priced above Dh80.
"We expect high sugar prices to prevail in the short term," said Somit Banerjee, an assistant general manager for trading at Al Khaleej Sugar. The UAE company sources its raw sugar from Brazil.
There is a "perceived shortage" of sugar in the market and prices are volatile," Banerjee said.
This year Brazil is expected to divert 54 per cent of sugarcane yield towards producing biofuels.
According to a Reuters report, white sugar futures fell yesterday in London. The March contract was at $399.10 a tonne, down $4.50, or 1.1 per cent, from Monday's close.
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