) -- Over the past few weeks, sugar has been on such a upward spiral, hitting a 28-year high, that it has caused investors to wonder the rally can be sustained.

From a global supply perspective, sugar is in trouble. Many think that the supply shortfall will extend through 2010. The problem is acute in India, the world's second largest sugar producing nation, where weak monsoon rains, the main source for irrigation for the nation's farmers, are causing drought-like conditions that have damaged the sugar cane crop.

In Latin America, Brazil, the world's largest sugar producing nation, has the opposite problem, with excessive rainfall hampering harvest and creating problems for the sugar crop.

The International Sugar Organization has said that global demand will exceed output by as much as 5 million tons in the year through September, 2010. This demand figures to remain intact, if not even increase, as the population in emerging markets continues to increase.

Those who doubt the rally can be sustained suggest that prices will not be remain at these levels because sugar-producing nations will most likely boost production of their commodity due to current price levels. That, in turn, will result in more sugar on the market in future years.

In a nutshell, for the near future, the fundamentals of sugar look appealing and it appears that supply and demand pressures should enable sugar to sustain its price levels. As for the long-term, only time will tell if production will outpace demand and affect the health of the commodity.

Some equities that have rallied as a result of the most recent surge in sugar include:

PowerShares Agriculture ETF

(DBA) - Get Report

, which is composed of sugar, wheat, soybeans and corn, is up 15.6% from a $22.50 close in March to close at $26.02 on Tuesday.

iShares MSCI Brazil Index

(EWZ) - Get Report

closed at $59.51 on Tuesday, a 87% increase from a $31.75 low in March.

-- Written by Kevin Grewall in Laguna Niguel, Calif.