Sugar prices climb to record high

Posted by Daniel Palmer on 5th January 2010

The price of sugar continues to rise after a strong 2009 when it outshone all other major food commodities.

White sugar reached a new record, while ICE raw sugar futures soared to a 29-year high amid bullish market sentiment and continued concern about the balance of supply and demand.

Prices more than doubled in the raw sugar futures market last year and analysts are forecasting further gains beyond current levels (27.43 cents/lb) .

“I think we will see 28 cents a pound very soon,” one senior London sugar futures dealer told Reuters. “When we hit 28 cents, there will be massive buy stops.”

A pullback in the market would not surprise in the near future, however, as traders look to take profits, but any hint of a tightening of supply or unsuitable weather in countries like leading producer Brazil would lead to a fresh surge.

“If there is any bullish news from Brazil, the market will fly,” the dealer advised.

Cocoa also remains at inflated levels despite edging lower overnight. Futures prices reached a 30-year high last month and remain close to those levels as chocolate demand holds strong amongst consumers.