RUSSIAS economic woes and currency devaluations mean the global market for sugar, currently trading at 10-year lows, remains poor.
Oversupply has been made worse by recent favourable weather in the growing regions. The world sugar surplus could run as high as 2 million tonnes this year and is expected to reach 5m next.
A spokesman for the International Sugar Organisation said the collapse of Asian demand, at one-time the driver of demand, was critical.
The market has also suffered from increases in local production from countries which were formerly importers, like India. China is also moving towards self-sufficiency in sugar.
There is another threat from devaluation in Brazil. Devaluation would mean it would be willing to sell sugar at lower levels.
Some analysts believe the current price of about $215/tonne (£129/t) for white sugar on Londons LIFFE futures market may be about to bottom out as the sector adjusts to the supply situation.
The Financial Times reports that production by the six member countries of the Sugar Association of the Caribbean declined by 17% this year because of unusually dry weather.
- Financial Times 17/09/98 page 44, page 44