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World sugar-price trends

05 November 2006

Business Day reported a fall in world sugar prices in October following an early start to the Indian sugar harvest which looks like being the highest ever following record plantings in 2005 in response to high world sugar prices. The World Association of Beet and Cane Growers similarly reported a weakening of futures prices on the back of prospects of a sugar surplus. However, Brazil is expected to boost ethanol production in response to the approval of a higher blending ratio. This should help to support sugar prices, following the 34% decline in world prices since March 31st 2006.

Longer-term prospects for sugar as a sweetener could also be affected by the emergence of sugar substitutes based on nectar from a cactus plant. Agave nectar is said to reduce sugar cravings and help burn off fat rather than store it.

Editorial comment

With declining world market sugar prices the preferential margin on exports to the EU, even after reform is becoming more attractive to low-cost ACP sugar suppliers. For low-cost non-LDC ACP suppliers the issue of the treatment to be accorded sugar exports under EPAs is thus taking on increased significance. For countries such as Swaziland unlimited access to the EU market could in large part off-set revenue losses arising from reduced EU prices.

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