Despite falling production in Brazil, world sugar output in 2011/12 looks set to exceed consumption, generating a large surplus for the second consecutive year. Weakening import demand is forecast to result in a contraction of world trade but also in an easing of international sugar quotations from the high levels recorded in 2011.
The FAO Sugar Price Index averaged 324 points in July 2012, up 34 points (12 percent) from June, ending the steady fall initiated in March. The upturn was triggered by untimely rains in Brazil, the world’s largest sugar exporter, which hampered sugarcane harvesting in July. Concerns over delayed monsoon in India and poor precipitation in Australia also contributed to the price increase.