Sugar Prices Sky Rocket as demand For Ethanol Increases
As the acceptance of alternate energy from renewable resources is realized, the market must adjust to the new realities. Putting that ethanol blend gasoline in your car’s tank, may just cause you to buy one less bottle of Coca-Cola. Read the article below, and tell me if you see this as a positive or negative development.
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Ethanol powering sugar price rush. Prices could rise to a 24-year high in 2006, traders, analysts and buyers say.
Sugar prices may rise to a 24-year high in 2006 as Brazil, the world’s biggest producer, uses more of its crop to make automotive fuels and demand for sweeteners rebounds in the U.S.
Raw sugar will average 14.74 US cents a pound on the New York Board of Trade this year, up from 10.03 cents in 2005, based on the median estimate of 17 traders, analysts and buyers surveyed by Bloomberg. Prices probably will touch 18 cents or more, the highest since 1981, a majority of respondents said.
Brazil is converting more sugar into ethanol after gasoline prices jumped to a record. A drought in Thailand, once the world’s second biggest exporter, and the prospect of reduced European Union exports are adding to the supply squeeze, raising costs for companies including cereal maker Kellogg Co. and Coca-Cola Co., the world’s largest producer of soft drinks.
“The markets got legs, no question about it,” said Edward Makin, chief executive officer of the Rogers Sugar Income Trust, a Montreal-based company that controls Canada’s biggest sugar refining group. “I don’t know if we’ll see $.25, but I’m hearing a lot of people talk about $.20.”
While crude oil prices made headlines in 2005, New York sugar futures jumped 62%, second only to a 94% surge in natural gas. Sugars gain accelerated late last year after the U.S. increased imports because of damage to domestic crops and refineries from hurricanes Katrina and Rita.
Above article appeared in the Edmonton Journal on July 17, 2006 and was taken from the Bloomberg News feed reported from New York