"We think think sugar prices, which are already high, could trend a little bit higher," CPM's Christian said.
Supply concerns have stemmed from the flooding in Australia, which have damaged the sugar crops there. Production is also falling in India, a very large producer and also the largest consumer of the crop.
Indian production is currently projected to be at about 24.5 million metric tons this year, which would be down from earlier estimates of around 26 million metric tons, said Christian.Demand for sugar remains strong, globally, with Egypt also being one of the big sugar consumers. CPM Group predicts that sugar will head back toward 36 cents a pound over the next week or so. "The sugar market appears as if a new leg to the upside is about to begin," PFGBEST's Rosenberg said in a report. Not only has the crop been damaged by the flooding in Australia, equipment will needed for sugar cultivation has also been damaged, the analyst noted. Rosenberg said losses to growers are estimated to be at A$500 million, or $499.9 million -- from a conservative view. Rosenberg added that strong energy prices have diverted sugar from food use to ethanol refining recently.