Sugar surges on expected supply shortfall

LONDON: Damaged crops from India to Brazil mean the world won't have enough sugar for a second straight year.

Global demand will exceed output by as much as 5 million tons in the year through September 2010, leading to a record two-year shortfall, according to the International Sugar Organization in London. Parts of Brazil, the largest grower, are drenched by rainfall four times more than normal and too wet to harvest. India, the biggest consumer, had its driest June in 83 years and may double imports.

The number of options to buy sugar for delivery in March at 30 cents a pound, 44 percent higher than the Aug 7 price in New York, has jumped more than 18-fold in four months. The rally is boosting expenses for food makers from Kellogg Co to Kraft Foods Inc and increasing profits for Cosan SA Industria e Comercio, the largest cane processor.