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April 2011 Commodity news and trends
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Sugar
The differentials between world refined sugar prices and raw sugar prices have fallen (March 2011) from their June 2010 highs to such an extent that some sugar refineries have temporarily shut down.

Very large price rises in raw sugar prices over the last year, passed through the production chain to refined sugar prices, combined with the world recession, have lowered demand, pushing down sugar refining differentials.

Increased volatility of sugar prices, going along with their sharp increases, have increased the variability of sugar refinery profits.

Sugar cane (tropical climates) and sugar beets (temperate climates), indistinguishable after being refined into white sugar, are grown in almost every country in the world. Sugar can also be stored in large quantities for long periods, and the overhang of sugar inventories translates into classic supply and demand cycles, with regular ups and downs in sugar prices.

Raw sugar, mostly cane sugar, is widely traded, efficiently cargo shipped, and stored in bulk terminals to such an extent that sugar refineries can pick and choose among virtually any producing country to take advantage of the lowest raw sugar prices.

The exceptions to the worldwide flow of free market cane sugar are the highly protected domestic markets in the United States, the European Union and Japan, still leaving plenty of worldwide demand in the free market sector, such as China and India.

In the United States market, with sugar prices double the world level, use of corn-based sweeteners, from strongly subsidised corn producers, remains strong.

Sugar cane is a very suitable feedstock for ethanol, particularly in the world's largest sugar cane producer, Brazil, and this will continue to support the world free market price for sugar.
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Focus in this issue: Ivory Coast cocoa Archives
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