| Sugar prices likely to increase | Send to a friend |
| Monday, 06 September 2010 22:06 |
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A decision by US authorities to open its markets to more sugar imports is likely to strengthen the renewed rally in global prices of the commodity, analysts said, with consumers worldwide including Tanzania expected to feel the pinch. Already, global sugar prices rose to a five-month high on Friday in response to the move that the US Department of Agriculture said was aimed at averting looming shortages in the domestic market. It said it would allow foreign suppliers to bring in larger consignments of sugar into the American market over the next two months. “It’s kind of an 11th-hour rescue,” Mr Robert Lindon, executive vice president of food and commodity advisory firm, Connell Commodities told Wall Street Journal on Friday “In the next six weeks, I think we are going to be very, very tight.” The USDA was responding to intense lobbying from sugar users, who claimed the country was in danger of running out of the commodity. The USDA twice increased its import quota this year at the behest of sugar processors and food manufacturers. The lobby has been a vocal critic of the government’s restrictions on sugar imports, which it argues are designed to protect American farmers by keeping US sugar prices inflated. Global sugar prices have surged more than 45 per cent since the beginning of May alone, with industry players mainly attributing the trend to weather-related port delays in Brazil which is the world’s largest exporter of the commodity. The rally has also been fanned by a spike in demand from the Middle East and Asia during the month-long Ramadhan season while the heavy flooding in Pakistan has also damaged huge hectares of sugarcane. Though Kenya is not directly linked to the international markets, the latest rally could affect local consumers on the basis of thinned supplies from traditional sources such as the Common Market for Eastern Africa (Comesa) should suppliers opt to divert shipments to premium markets. Besides diversion of sugar driven by the current high prices in the international markets, supply of sugar in Africa is generally expected to be tighter in the coming period thanks to the European Union driven programme that grants 50 poor countries unlimited and duty free access into its market. In the deal no tariffs or quantitative restrictions have been applied on imports from the poor countries as of October last year. So far, large investments have been made by poor nations, particularly those in Africa, to expand sugar production and processing capacity at the farm and mill levels in anticipation of capitalizing on opportunities granted by improved market access to the EU. In 2008, poor countries sugar exports to the EU totalled 400,000 tonnes, a 33.6 per cent increase from 2007. Add this page to your favorite Social Bookmarking websites           |
