Outlook ‘08: Biofuel to drive up sugar prices also

The worldwide demand for sugar continues to be very strong, thanks increasingly to biofuel production.

Add a reduction in beet production in Europe and you have an estimated 11pc increase in sugar price to US13c a pound for this current financial year, according to ABARE.
The strength in this price has surprised the economists as it comes despite a 17pc increase in global production this year.

Importantly, the price is expected to average US12.1c for the upcoming 2008-09 year, but just how much of these historically higher prices will be passed onto growers depends on the Australian dollar.

Whatever the case, ABARE has forecast the sugar price to remain above US10c pound out to 2012-13.

The medium-term, or five-year, outlook for sugar is highly reliant on the biggest producer, Brazil, a country that is forecast to increase its production by 20pc within the same period.

North Queensland Register