World Commodity Forecast: Sugar

The process of forecasting is an excellent means of obtaining the fundamental insight that pertains to a product's probable future tendency. This process is aimed at obtaining possible proceedings within industries that are linked to a particular product. Moreover, it is aimed at attaining the viewpoint of key forecasters concerning the condition of the market. Sugar is basically a seasonal product. It is mostly affected by the weather pattern. Additionally, it is affected by the economical state in producing nations. Global sugar prices are usually determined by the demand from the largest nations of the world which use sugar. Such countries include India and USA.

Analysis and forecast of demand for the commodity, sugar.

The current global demand for white sugar surpasses the supply. The 2^nd revision of the global sugar equilibrium has already been conducted. This revision covered the period between October last year and this month. It revealed a broadening gap between global sugar demand and production. At the moment, the global sugar economy is experiencing a major gap in between demand and output. Presently, global sugar production stands at one hundred and fifty seven (157) million Tonnes. Conversely, the global sugar demand is anticipated to increase at a rate which is moderately low. This rate is credited to the escalating global market prices. Furthermore, it is attributed to the effects of world's economic depression. Contrastingly, the International Organization for Standardization (ISO) doesn't foresee that the proposed universal fiscal growth shall significantly kindle sugar demand.

Global sugar prices escalated on 10^th of this month subsequent to poor weather conditions in Brazil which is the world's biggest producer of sugar. The poor weather delayed shipments from this nation. As a result, the there has been a short supply of the commodity and this has led to the escalation of prices across the globe. The global sugar shortage is anticipated to reach nine point four two five (9.424) million Tonnes by November this year (Indian Sugar Mills Association, 2010).  On the other hand, a big fraction of sugarcane produced in Brazil is now utilized in the production of ethanol. As a result, the amount of sugarcane available for sugar production has reduced drastically leading to shortages. Second- India is the world's largest consumer of sugar. However, due to bad weather, sugarcane production has reduced drastically in the recent times. Thus it has been compelled to export the commodity. Owing to these state of affairs, sugar supply has reduced drastically. At the same time, the demand for the commodity has increased considerably (Tutor2u., 2010).

Short-term forecast of Sugar Demand (next 3 months)

The global sugar demand is anticipated to reach one hundred and sixty six point five eight five (166.585) million Tonnes by the end of this year. The current expansion in sugar output is extremely low and as a result, it cannot meet the expected increment in sugar demand. In the next two months, the global sugar shortfall is anticipated to reach nine point four two five (9.425) million Tonnes. The demand for sugar is usually affected by the population growth. Second, it is affected by consumer earnings. Third, global sugar demand is affected by the prices of substitute sweeteners'. Last, it is affected by a variety of low calorie artificial sweeteners. Thus, the demand for the commodity in the next few months is likely to increase due to an increment in the number of people globally. Per capital consumption of commodity sugar is fading in the developed nations of the world. However, it is escalating in third world countries. This means that customers may possibly select food options that are relatively expensive as earnings escalate (Investment Tools.com., 2010).   

Intermediate forecast (1-2 years)

The demand for sugar is anticipated to expand by approximately two (2) % by the end of the year two thousand and twelve (2012). This growth is attributed to first and foremost, the increasing consumer earnings. Second- it is attributed to lower sugar prices which are anticipated to make the commodity less expensive. Specifically, this growth in consumption is likely to be experienced in Asia. In this Continent, per person consumption of the commodity stays low. This is in comparison to the global average. On the other hand, sugar demand in North Africa and Middle East is expected to increase. This is attributed to the escalating per capital income. Additionally, it is attributed to population growth (Investment Tools.com., 2010).

Long term forecast for the commodity (5 years).

According to a report presented by both FAO and OECD, on July, 2007, the demand for sugar has actually been pressed by the escalating demand for ethanol. In the next five years, the supply the commodity is expected to stabilize. The demand for bio-fuel is not anticipated to limit the quantity of sugarcane on hand for the production of sugar. Furthermore, sugar exports are anticipated to escalate. This is likely to have a significant sway on the global sugar prices.

The global sugar demand is anticipated to increase to more than one hundred and eighty six thousand (186,000) kilo Tonnes per annum in the next five years. It is expected that the increment in sugar demand shall be witnessed in third world countries by the 2015. The quickest growth in sugar demand is expected in both China and Japan (Confectionery, 2007).