Even though the global price has already slumped by around a third over the last two years, sugar has been the worst performing of the major agricultural commodities so far in 2013, falling by another 7%. This weakness has been driven by ample supply, as good weather and increased investment in agricultural machinery has boosted harvests. With excess supply set to continue and demand likely to remain subdued, we expect the US benchmark sugar price to finish 2013 at around 15 cents per pound, down from 18 today. A sustained recovery may not come until 2014, when the extended period of weak prices should finally prompt enough suppliers of sugar for the food chain to switch to producing ethanol, or to exit the market completely.
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