Wednesday, September 30, 2009

Sugar is the New OIl

Sugar is the new crude oil for investment-hungry hedge funds, which are pushing sugar prices near 30-year highs and ushering new global shortages, reports Paul Tharp of Bloomberg.

"The fundamentals and macroeconomic factors are coming together and more money is there," said economist Sergey Gudoshnikov of the International Sugar Organization. "Sugar is one of the better commodities for investing and the fundamentals are helping."

Weather problems at major producing areas in India and Brazil, along with increased use of cane for creating ethanol, have helped fuel hedge funds' sugar highs.

In trading here yesterday, raw sugar surged as much as 4.4 percent to 25.15 cents a pound before settling at 25 cents, up 3.5 percent, the highest close since 1981.

Sugar consumption is also surging faster than expected, with consumers currently using 8.3 million more metric tons of sugar than is produced -- up dramatically from the 5.1 million shortfall forecast in June.


  1. And don't forget new "Low GI" sugar for the health conscious market.

    See here.

  2. Another factor in rising sugar prices, mentioned here, is that large quantities of Brazilian sugar are now being diverted to ethanol.

    It's interesting to note that Obama's "Chicago Boy" lobbying on behalf of Chicago for the Olympics, versus rival Rio, may have some economic fall out.