Drop in Sugar Prices a Bitter Turn for Some Countries

Earlier this year India and Brazil were riding on quite a sugar high. Unfortunately for them, they've crashed back down to Earth, and today's prices aren't looking quite so profitable for the world's largest sugar producers.

In February sugar prices had reached a 17-year-high based on rising demand and poor weather influencing crops in both India and Brazil.

Speculation was rife, but everyone expected that sugar prices would be very high for most of this year.

But India and Brazil's sweet deal was not meant to be. A combination of factors cited at Bloomberg reveal that sugar prices are falling fast.

First, food manufacturers and confectionaries weren't keen on buying sugar at such inflated prices, and the resulting lack of demand drove prices down a bit.

Then, the crop coming out of Brazil and India turned out to be better than expected, revealing that the demand/supply ratio wasn't going to lead to dramatically higher prices.

And now Egypt has canceled an order for 100,000 metric tons of sugar based on an expectation of lower prices.

It's a bitter turn for Brazil and India, as well as those speculators who were betting on rising sugar prices.

But, on the other hand, the future is looking pretty sweet for those same food manufacturers and confectioners who held out for lower wholesale sugar prices. The falling prices for sugar will also be particularly welcome for smaller businesses who were struggling with the rising costs of food and other food ingredients.