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The Global Sugar Industry 2009/2010
"The End of Cheap Food"

Our Summary Report's Notes:

Abbreviations and Explanatory Notes

Introduction:

• Sugar Definition
• Sugar Cane Definition
• Sugar Beet Definition
• Ethanol from Sugar Definition
• Factors impacting sugar to ethanol viability

The EU converts refined sugar to ethanol Market

• Production and consumption
• Production capacity
• Use of raw material

Brazilian Sugar

• Producing Brazilian Sugar
• Types of Brazilian Sugar for Export
• Brazilian Ethanol Production
• Brazilian Sugar and Ethanol Industry
Indus
• U.S. and Brazilian Ethanol Comparison

International Sugar Organization (ISO)

The Global Alliance for Sugar Trade Reform and Liberalization

World Food Price Inflation in 2007/2008 (FAO Report Review)

Sugar(World Production - Supply and Distribution)

• PRODUCTION
• World production and consumption of sugar
• Industry structure and development

Sugar Futures and Options Trading

• The Role of the Exchange
• Trading Sugar Options

ISO World Sugar Market Review

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Abbreviations and Explanatory Notes

ACP

African, Caribbean and Pacific States

Affination

Production of a magma by mixing sugar with syrup and then centrifuging the
magma with or without washing

Affined sugar

Sugar purified by affination

After product sugar

Sugar
gar of the final crystallization stage (C sugar)

Alkalinity

In the product streams of a beet sugar factory, the result of a titration with
standardized acid solution to a phenolphthalein endpoint or equivalent pH,
expressed as g CaO per 100 ml

Alkalinity, effective

The
he solid residue left after incineration in the presence of oxygen (crude ash, carbonate ash).
In analysis of sugar products, sulfuric acid is added to the sample, and this residue as
sulfated ash heated to 800 °C is taken to be a measure of of the inorganic constituents.
Sometimes determined indirectly by measure of the electrical conductivity of solutions of
the products.

Alliance for Sugar Trade Reform and Liberalization

The Global Alliance for Sugar Trade Reform and Liberalizations was established
es
during in November 1999 when members (Australia, Brazil, Canada,
Canada Chile,
Colombia, India, Guatemala, South Africa and Thailand) agreed and signed a
communiqué calling for WTO agreement on agriculture that includes positive,
progressive and meaningful
meaningful reform of the world sugar market by ensuring that
sugar is included as an important element of the agricultural trade agenda.

Availability of processing plant capacity, and the weather

Both influence the duration of harvesting and processing - the industry
dustry can lay up
harvested beet until processed, but a frost-damaged
frost damaged beet becomes effectively
unprocessable.

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Bagasse

The residue obtained after crushing cane in a mill is known as bagasse.
Depending on the number of the mill it is referred to as first
first mill bagasse, second
mill bagasse, etc. After a diffuser the residue is called diffuser bagasse. The final
residue from a milling train or from the dewatering mills of a
diffusion plant is called final bagasse or simply, bagasse.

Bagasse Extract

The liquid fraction decanted from the bagasse after blending with water in the
colddigester.

Bear Market:

A market in which prices are declining.
declining

Beet

Sugar beet root, botanically the thick main root with hypocotyls in which sugar is
stored.

Beet brei

Beet sample prepared for analysis in the form of fine particles.
particles

Beet clamp

Stack of stored beet.

Beet flume

Concrete-lined
lined ditch or metal trough designed for the hydraulic transport of beet.
beet

Beet knife

Rectangular piece of steel designed to slice beet into cossettes.

Beet pile

Store of beet in suitably prepared areas of the factory yard.
yard

Beet pump

Special centrifugal pump used to lift beet and water.
water

Beet rasp, beet saw

Devices to obtain beet brei from beet samples.
samples

Beet sampler

Scooping device
evice to collect beet samples.
samples

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Bid

A contractually binding offer to buy sugar at a certain price within a certain time
limit that can be given either in writing or orally.
orally
(Sometimes
Sometimes referred to as a “firm bid”.

Blended sugar (sugar dextrose)

In some
ome locales, dextrose, a corn-derived
corn derived sweetener, is added to granulated cane
or beet sugar to create a white granulated blend that may be less expensive than
traditional sugar.
Dextrose is about 70% as sweet as sugar and is more hygroscopic (water
(
attracting).
ing). Because of these characteristics, blends may not perform exactly as
sugar in certain recipes.

Brown sugar

Brown sugar consists of sugar crystals contained in molasses syrup with natural
flavor and color components.
Many sugar refiners produce brown
brow sugar by preparing and boiling special syrup
containing these components until brown sugar crystals form.

Brix

Refractometer brix the term used when a refractometer equipped with a scale,
scale
based on the relationship between refractive indices at 20°C andd the percentage
by mass of total soluble solids of a pure aqueous sucrose solution, is used instead
of a hydrometer to test the solids concentration of a sucrose containing solution.

Brix-Free Water

The water associated with the fibre in cane and bagasse.
bagasse. In some respects this
sorpfionwater behaves in a manner similar to water of hydration and it is not
available for dissolving sucrose. It is driven off at elevated temperatures. The
amount of brix-free
free water is assumed to be 25% on dry fibre.

Candy crystals

Large sugar crystals produced by a special crystallization process (19
19. Mai).

Carryover

The surplus stocks of a commodity from a previous season that are used in the
current season.

Current Crop (CC)

Sugar to have been produced since the start
start of the current crop year for that
particular origin.

COMMISSION
OMMISSION REGULATION (EC) No 77/2008

Commission regulation (EC EC) No 77/2008 of 28 January 2008 setting delivery
obligations for cane sugar to be imported under the ACP Protocol and the
Agreement with h India for the 2007/2008 delivery period.

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COMMISSION REGULATION (EC) No 505/2009

Commission regulation (ECEC) No 505/2009 of 15 June 2009 adjusting the delivery
obligations for cane sugar to be imported under the ACP Protocol and the
Agreement with India
ndia for the 2008/2009 delivery period and the delivery period
beginning on 1 July 2009.
2009

Convert Metric Tons / Tons

To convert this To this Multiply by:
short tons metric tons .9072
short tons pounds 2,000
kilograms pounds 2.2046
Pounds kilograms
grams 0.4536
Pounds troy pounds 1.2153
metric tons pounds 2,204.6
metric tons short tons 1.1023

Convert Acres / Hectares

1 Hectare = 2.47 Acres.
Acres
1 Acre = 0.40 Hectares.
Hectares

To convert this To this Multiply by:
pounds per acre kilograms per hectare 1.14
short tons per acre kilograms per hectare 2.25
kilograms per hectare metric tons per hectare .001
kilograms per hectare pounds per acre .88
tons per hectare short tons per acre .44
tons per hectare kilograms per hectare 1,000

Crystal content

Proportion by mass of crystals in the magma.
magma

Crystallization in concentrated / supersaturated sugar syrups

Crystallization or granulation is natural conversion from liquid state into solid
state due to cooling of supersaturated liquid.
This is NOT deterioration.
terioration.

CSR Sugar

As Australia’s largest sugar producer, CSR has seven mills located in some of
Australia’s most productive sugarcane regions. CSR also owns 75% of joint
venture interests in sugar refining in Australia and New Zealand and is a major
maj
Australian ethanol producer.

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DAC Extract

The liquid fraction decanted from the cane after blending with water in the
colddigester.

DAC Factors

Brix Factor

The percentage ratio of the total brix in mixed juice, final bagasseand where
applicable,
ble, diffuser press water mud, to total brix in cane as determined by direct
analysis.

Pol Factor

The percentage ratio of the total pol in mixed juice, final bagasseand where
applicable, diffuser press water mud, to total pol in cane as determined by direct
d
analysis.

Fibre

Fiber is the cane plant’s vegetable skeleton in which juice is stored and through
which plant food, dissolved in water, is distributed throughout the plant. In the
milling process, the fiber cells are ruptured, thus freeing the juice.
juice. The fiber
content of sugar cane varies according to variety.
variety The normal range is 10% to
16%. Medium and consistent fiber content is desirable in commercial varieties.
varieties

DAC fibre

Fibre % cane derived from direct cane analysis and applying the formula
Fibre % cane = (100-M-3 3b)/(1-0.0125b)
in which
M= moisture % cane
b= brix % extract

Demurrage

An agreed amount payable to the owner in respect of delay to the vessel beyond
the laytime, for which the owner is not responsible.

Despatch

An agreed amount payable by the owner if the vessel completes loading or
discharging before the laytime has expired.
expired

Despatch On All Time Saved (ATS )

Despatch money shall be payable by the owner from the completion of loading or
discharging to the expiry of the laytime including periods exempted from the
laytime.

Discounts

Negative price differential between physical sugar and its corresponding futures
month.

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Discretionary Account

An account in which the customer gives the broker or another party trading
tra
authority to buy and sell commodities on his behalf.

Dried sugar beet cossettes

Commercial term for dried (including pressed) cossettes from which no sugar has
been extracted.

EBA

Everything But Arms (initiative).
Initiative designed in favour of
o Least Developed Countries.

Ethanol

An alcohol (C2H5OH), used for a variety of purposes.
purposes

Equity

The total cash value of an account, including the amount of profit or loss that
would be incurred if the existing futures positions were liquidated at th
the current
settlement price.

Exercise

Taking advantage of the right to buy or sell the underlying futures contract at the
agreed upon strike price.

Ex-pit Transaction

A legal trade executed outside the exchange trading ring.
Used normally to transfer positions from one clearer to another.

EU "quota" and subsidized

The EU subsidies and a high import tariff make it difficult for other countries to
export sugar to the EU states, or to compete with the Europeans on world
markets.

Extraction losses

Quantity
ntity of sugar entered but not contained in the raw juice as a percentage of
the beet or cane mass.

False grain

Undesirable small crystals.
crystals

Fanged beet

Beet with multiple tap roots.
roots

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Final molasses

The black syrup, commonly known as molasses or ‘C’ syrup, remaining after the
sugar syrup has been boiled and passed through the centrifugal for the last item
in a mill or refinery.
The sugar it contains cannot be removed economically.
A typical analysis of final molasses includes sucrose (34.1%), reducing
reduci sugars
(16.5%), ash (11.3%), water (21.8%) and various sugar, gums and acids
(16.3%).
The ash includes calcium, magnesium, potassium, silicon, iron, and phosphorous
and other elements in the form of inorganic salts.

Force Majeure

Events and happeningsngs that occur which prevent or delay loading or shipping.
shipping
These events, as stated in the rules of SAL and RSA, are as follows:
War, strikes, rebellion, insurrection, political or labour disturbances, civil
commotion, fire, stress of weather, act of God orr any cause of force majeure
(Whether or not of like kind to those before mentioned) beyond the sellers
control.

Form A

Otherwise known as GSTP Form A showing that the sugar is from a country of
origin which is a member of the General System of Trade
Trade Preferences.
Preferences

Fructose

A sugar, which occurs in, fruit, the nectar of flowers, honey, and in cane juice and
sugar products. It is formed in equal quantity with glucose when sucrose is
inverted. In solution, it rotates polarized light to the left. It has
has the chemical
composition C6H12O6.

Fuel ethanol

Ethanol blended with petrol, used as a fuel for the transportation sector.
Ethanol is now the most widely used alternative fuel in the world; the biggest use
of ethanol in the United States is as an additive
additive in gasoline. It serves as an
oxygenate (to prevent air pollution from carbon monoxide and ozone), as an
octane booster (to prevent early ignition, or 'engine knock'), and as an extender
of gasoline.

GSTP

General System of Trade Preferences. A certificate
ce (sometimes referred to as a
Form A) showing that the country of origin of the sugar is a member of the GSTP
group of countries. This is one of the documents that are necessary in order to
enter sugar into other GSTP countries at often preferential
preferential rates of import duty.

Glucose

A sugar, which occurs naturally in grapes, honey, sweet fruits, and in cane juice
and sugar products. It can also be made from wheat. In the human body, sucrose
is converted into glucose and fructose before being used to provide energy. It has
the chemical composition C6H12O6
C and may also be called dextrose.
dextrose

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Hardening of brown sugar

Brown Sugars have a natural tendency to harden upon storage due to inherent
moisture.
The ideal storage conditions for these sugars are a constant temperature between
10-22 degrees and with a humidity variation within 40-60%.
However, if storage conditions are not right, then the product will turn hard.
To soften the hard natural brown sugar is to expose it to moisture (surprising) by
putting
tting it in a container and covering it with damp cloth or by putting some apple
wedges in the container and close the lid.

Helms Burton Act

American legislation that prevents US companies and their overseas subsidiaries
from trading Cuban sugar.

HFCS

High Fructose Corn Syrup.
This is the most common name for starch-based
starch based fructose/glucose syrups.
Corn is the starch base of these syrups. Other suitable but not as widely used
starch sources include rice, wheat and tapioca. In Europe HFCS is referred to as
iso-glucose.

ICUMSA

International Commission for Uniform Methods of Sugar Analysis. A scale of
measurement for the colour of sugar. The lower the ICUMSA, the whiter the
sugar.

Insoluble Solids

Insoluble material in mixed juice or press water mud, determined gravimetrically
by filtration according to a prescribed method.

Initial Margin

The amount of money that must be deposited in an account when a futures
position is established. Also called Original Margin

International Scale(of polarization premiums).
pr

For every full degree above 96 to and including 97 add 1.5%, for every degree
above 97to
to and including 98 add 1.25%, and for every degree above 98 to and
including 99 add 1.0%. Fractions of degree are calculated pro rata.

Intermixed Cane

That portion of cane on a cane carrier originating from the overlapping of
different consignments.
Its composition is unlikely to be representative of anyone consignment and it is
therefore excluded from consignment sampling.

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International Sugar Agreement
Agreemen

The International Sugar Agreement of 1958:
A United Nations Sugar Conference met in Geneva during September and
October, and prepared the text of a new International Sugar Agreement.

ISO

International Sugar Organization

Inverse

Positive price differential
erential where the price of the nearby shipment position is at a
premium to the more deferred position.

Juice

Mixed juice the mixture of juices from the extraction plant delivered into the juice
scales. Press water the juice expressed in dewatering diffuser
diffuser bagasse.

Juice purification

Partial removal of no sugar substances from the raw juice while producing a thin
juice.

Laytime

The period of time agreed between the parties during which the vessel owner will
make and keep the vessel available for loading
loading or discharging without payment
additional to the freight.

Limit Orders

Orders to brokers to buy or sell at a specified price or better. Sometimes called
resting orders.

Liner Out

The seller / ship owner delivers the commodity to the port of discharge and
discharges on to the quay at no cost to the buyer. No demurrage or dispatch to
be paid.

LDA

Late Delivery Allowance.

LDCs

Least Developed Countries.
Countries

Magma

Mixture of crystals and syrup.
syrup

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Minimum Price Fluctuation

Also called minimum
m tick. The minimum price increment in a futures market. In
New York No.11 Sugar it is 1 point, which equals $11.20 per contract of 50 tons.

Mill Whites

Low quality white sugar produced directly at the mill with a color usually around
300 ICUMSA. (Otherwise
rwise known as plantation whites.)

Notice of Readiness (NOR)

The notice to charterer, shipper, receiver, or other person as required by the
charter party that the vessel has arrived at the port or berth and is ready to load
or discharge.

Mixer

Apparatus
atus to distribute magma to the centrifugals.
centrifugals

Moistness in sugar sachets during storage

All natural brown sugars have a natural tendency to absorb moisture or use
existing moisture to become moist and hard.
The basic character of being hygroscopic, 100% natural, containing molasses,
minerals is the main reason why this natural brown sugar retains & imparts rich
flavor to foodstuff.
Moisture absorption is a factor of external parameters like ambient humidity,
storage conditions, packing conditions and amount
amount of natural mineral and nutrient
contents in natural brown sugars.

Molassed dried pulp

Commercial term for a mixture of dried pressed pulp and molasses.
molasses.

Molasses

bearing product of the sugar end whose purity has been reduced to the
The sugar-bearing
point that further crystallization of sugar is not economical feasible without
special treatment of molasses.
molasses

Mud

The material removed from the bottom part of the subsides.. The mud contains
the settled insoluble solids.

Net titer (nt)

A measure of the commercial
ercial value of raw sugar for refining purposes.
Net titer provides a method for expressing different sugar at a standard value and
is used of statistical and payment purposes.
The net titer of a sugar is calculated by subtracting the reducing sugar content
cont
and five times the ash content from the polarization of the sugar.

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Non-centrifugal
centrifugal sugars

In some areas of the world sugar cane juice is merely evaporated to produce a
crude raw sugar; the sugar crystals are not removed from the mother syrup in
centrifugals.
The sugar is generally consumed where it is produced. Some of these sugars are
known as Jaggery, Gur, Piloncilo and Muscovado.
Jaggery and Gur are made in India by evaporating cane juice in an open pan. The
juice is evaporated to almost dryness
dryness and is then cast in open moulds or loaves.
A large amount of sugar consumed in India is in this form.

Nonsucrose

Substances contained in raw material and its products except sucrose and water.
water

Nonsucrose content

Difference between dry substance content
co and its sucrose content.

Nonsugar

Common overall term for substances contained in the raw materials and products
of the sugar industry except sucrose (sugar) and water.
water

Nonsugar content

Difference between dry substance content and sugar content in
in the meaning of
Sugar content (a) and (b) (q.v.).
(q.v.)

Normal Mass

The mass of sample equal to the normal mass of sucrose.
That mass of pure dry sucrose which, when dissolved in water to a total volume
of 100cm3 at 20°C C and read at the same temperature in a tube 200 mm long,
gives a reading of 100 degrees on a saccharimeter scale.
scale According to the
International Sugar Scale the normal mass of sucrose is 26,000 g.

Nucleation

Generation and development of small crystals capable of growth.

Pelleted seed

Beet
et seed brought to uniform size by coating.
coating

Per Hatch Per Day

Means that the lay time is to be calculated by dividing the quantity of cargo by
the result of multiplying the agreed daily per hatch by the number of the
vessel’s hatches. Each pair of parallel
parallel twin hatches shall count as one hatch.
Nevertheless, a hatch that can be worked simultaneously by two gangs shall be
counted as two hatches.

Piled beet

Stored beet (as distinct from freshly harvested beet).
beet)

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Plantation Whites

Low quality or unrefined
refined white sugar produced directly at the mill.

Points

One point is 1/100 of one cent per pound.
pound To convert the price of sugar from
points per pound into dollars per metric tone multiply them by 0.220462.
0.220462 To
convert them into dollars per long ton multiply by 0.224.

Polarization

Measurement of sucrose content in sugar.
sugar 100 are maximum and means 100%
sucrose. Raw sugar is usually traded basis 96 polarizations.

Polarization Premiums

Scale of payments for rewarding the producer for delivering sugar
sugar above 96
polarizations or penalizing the producer for delivering sugar between 96 and 93.

Pol

The apparent sucrose content of any substance expressed as a percentage by
mass and determined by the single or direct polarization method. The term is
used
d as if it were a real substance.

Polarization

Term customarily used in sugar analysis for the optical rotation of a sugar
industry product, measured under the same conditions.
conditions

Precision seed

Monogerm seed produced from multi-germ
multi seed by rubbing and grading.
grading

Preparation index

Percentage ratio of dry substance in ruptured cells to total dry substance in cane.
cane

Pressed pulp

Pressed, exhausted cossettes, leaving the pulp presses.
presses

Processed seed

Beet seed brought to a uniform size by mechanical treatment
treatment and screening.
screening

Purity

The percentage ratio of sucrose (or pol) to the total soluble solids (or brix) in a
sugar product.. The following terms are in general use:
Refractive apparent purity: The percentage ratio of pol to refractometer brix.
G.C. sucrose
crose refractometer brix purity: The percentage ratio of GC sucrose
torefractometer brix.

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Purity

Sugar content as percent of dry.
dry

Raw juice

Juice obtained from beet or cane after extraction, pressing or milling.
milling

Raw juice draft

n from the extraction plant as percent of mass of cossettes
Mass of juice drawn
introduced.

Ratoon

Cane, which grows from the stools, left in the ground after crop has been
harvested.

Raw Sugar

Raw sugar is a tan to brown, coarse granulated solid obtained on evaporation ofo
clarified sugar cane juice. Raw sugar is processed from the cane at a sugar mill
and then shipped to a refinery.
refinery It is about 98% sucrose. Raw sugar is not sold to
consumers.

Reducing sugars

Reducing sugars are those, which have the ability to chemically
chemically reduce (withdraw
oxygen) certain other chemical compounds.
In milling and refining, reducing sugars (mainly glucose and fructose) are
regarded as impurities.

Refined sugar

After being harvested, the sugar cane is sent to the refinery (sugar is always
transported in a raw or partially refined condition as humidity will damage a fully
refined bulk shipment) where it is first washed to remove soil and impurities.

Sugar which has passed through the refining process (involving removal of
impurities) making
g it more suitable for direct human consumption or use in the
manufacture of other foods. Also known as white sugar.

Recoverable sugar

Part of the sugar in beet, which can be obtained as white sugar in % on beet.
beet

Refining

Purification of sugar through recrystallizing and chemical and physical methods.
methods

Remelting

Refers to taking domestically produced raw sugar and refining it into whites either
for local consumption or for export. (Usually refers to Thailand.)

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Remelting

Refers to taking domestically
domestically produced raw sugar and refining it into whites either
for local consumption or for export. (Usually refers to Thailand.)

RSA

Refined Sugar Association.

Run-off (syrup)

General term for syrups produced on centrifuging magma.

SAL

Sugar Association of London.

SEOs

Seller’s Executable Orders where the seller gives instructions to the buyer to sell
futures to set the final contract price plus or minus the premium or discount.

Silin number

Length in meters of 100 grams of cossettes.
cossettes

Spreads

Price
ce differentials between different forward shipment positions for either
physicals or futures.

Stop Orders

Orders to buy or sell at the market if the contract trades at or through a specified
price (the stop price).

Stop Limit Orders

Orders to buy or sell at a specified price or better if the contract at or through a
specified stop price.

Store brown sugar

Store brown sugar in a way that allows the product to retain its natural moisture-
moisture
in its original plastic bag (closed tightly) or in a moisture-proof
moistu proof container. If the
sugar hardens, let it stand overnight in a sealed jar with a damp paper towel or
apple slice. For a quick fix,
fix heat the needed amount in a 250 oven for a few
minutes, or microwave on low for 1-2 minutes per cup. Use immediately

Strike

A concerted industrial action by workmen causing a complete stoppage of there
work which directly interferes with the working of the vessel. Refusal to work
overtime, go-slow,
slow, or working to rule and comparable actions not causing a
complete stoppage shall not be considered a strike.

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Strike Price

The fixed price in a range of fixed prices in the option market at which the calls or
puts are traded, for a premium to the seller / granter.

Sucrose

D-glucopyranosyl-β-D-fructofuranoside,
The pure disaccharide α-D fructofuranoside, known
commonly as sugar.
In the South African Sugar Industry sucrose is determined by GC.

Sugar Cane

Botanically a tall grass of the genus Saccharum and agriculturally the crop
produced from hybridsids which are the progeny of a number of Saccharum species
commonly referred to as cane. Specifically for the determination and distribution
of sucrose in cane it is the raw material accepted at the mill for processing.

Sugar No. 11 contract

ld benchmark contract for raw sugar trading.
Is the world
The contract prices the physical delivery of raw cane sugar, free-on-board
board the receiver's
vessel to a port within the country of origin of the sugar.

Supersaturation coefficient

Quotient formed by dividing the
the sugar/water ratio of a supersaturated solution by
the sugar/water ratio of a saturated solution under the same conditions.
conditions
(temperature and purity or no sugar/water ratio)

Supersaturation, critical

Supersaturation at which nucleation begins spontaneously.
spontaneou

Surplus Sugar

Formerly known as C sugar, surplus sugar is that which is produced in
excess quota. Starting in 2006, there has been an agreement in place that British
Sugar buy these feom beet growers at a reduced price, similar to how C beet was
handled.

Syrup

General term for sugar solutions of higher concentration.
concentration

Swedish number

Ratio of the mass of cossettes longer than 5 cm to those shorter than 1 cm.

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Switch

Liquidating a futures position in one delivery month while simultaneously
establishing that position in another delivery month.

Transport water

Water used to transport beet.
beet

Tel Quel

Literally Quality as is A method of buying or selling sugar when the seller includes
the cost of the polarization premiums in the price. Therefore,
Therefore, no polarization
premiums are to be paid.

Time Value

The amount of the option premium that exceeds its intrinsic value.

Tolling

The refining of imported raw sugar for re-exports as whites.

Trade house

A company or corporation that buys sells and transports physical commodity for
his or her own account and risk.

TCSC

Thai Cane Sugar Corporation.

TSTC

Thai Sugar Trading Corporation.

Turbinado sugar

Turbinado sugar is raw sugar that has been refined to a light tan color by washing
in a centrifuge
entrifuge under sanitary conditions. Surface molasses is removed in the
washing process. In total sugar content turbinado is closer to refined sugar than
to raw sugar. It can be purchased in many health food stores and some
supermarkets.

UK Scale

Scale off polarization premiums.
premiums Buyer has to pay an extra 1.4% per degree for
sugar with a polarization from 96 to 99 degree. Part of a degree to be charged
pro rata. No extra premium to be paid above 99 degree.

U.S producers of sugar have switched to corn syrup
syru

The United States sets high sugar prices to support its producers, with the effect
that many former consumers of sugar have switched to corn syrup (beverage
manufacturers) or moved out of the country (candy makers).

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Variation in crystal size & color of brown sugars

The natural brown sugars at sugarindia are not produced by coloring refined
sugars.
A non natural brown sugar is simply a white sugar crystal, which is then sprayed
with some form coloring to give it a 'brown' appearance, in which case
manufacturer has a option to control both grain size and color of finished product.
Natural Brown sugars such as demerara, coffee sugar, muscovado etc are
produced directly from sugar cane.
c

Variation Margin

The amount of money that must be deposited in a futures account to restore the
equity back to the initial margin requirement.

Ventilation of stored beet

Introduction of air current in order to maintain desired storage temperature.
temperature

VHPs

Very High Polarization Sugar. A non-exact
non exact term that usually refers to bulk
Brazilian sugar that has a polarization between 99.0 and 99.5 degree.
degree In Thailand
VHPs can refer to bulk raw with a polarization above 99.5 degree.

VVHPs

Very Very High Polarization
larization sugar. A non-exact
non exact term that usually refers to bulk
Brazilian sugar with a polarization above 99.5 degree. (They
They can also be called
Bks, which refers to VVHPs with a maximum ICUMSA of 750).

WABCG

World Association of Beet and Cane Growers.
Growers

Washing

Washing of the crystals during centrifuging with syrup, water or steam

Washing off

Unloading of beet by water jet

Wash run-off (syrup)

Syrup produced in washing sugar during centrifuging.
centrifuging

Wheat and Corn (maize) threaten the traditional sugar market
market

The Cheap prices of glucose syrups produced from wheat and corn threaten the
traditional sugar market.
Used in combination with artificial sweeteners they can allow drink
manufacturers to produce very low-cost
low goods.

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Weather Working Day (WWD)

A working day of 24 consecutive hours except for any time when prevents the
loading or unloading of the vessel or would have prevented it had work been
progress.

Weight variation in sachets

Weight variation in sugar sachets is an inevitable phenomenon.
phenomen
Though customers have nothing to lose.
Sugarindia packs sachets/ tubes of sugar by weight & not by counting.
Net weight of each carton is 10kg counting ideally 2000 sachets/ tubes of 5 gms
each or as the case may be.

Whites Premiums

Usually refers
s to the price differential between raw and white sugar as shown by
the New York and London futures markets. (Expressed in dollars).

WIBON

Whether in Berth Or Not. If no loading or discharging berth is available on her
arrival, the vessel, on reaching
reaching any usual waiting place at or off the port, shall be
entitled to tender notice of readiness from it and lay time shall continue in
accordance with the charter party.

WIFPON

Whether In Free Pratique Or Not. The completion of customs formalities shall
shal not
be a condition precedent to tendering notice of readiness, but any time lost by
reason of delay in the vessel’s completion of these formalities shall not count as
lay time or time on demurrage.

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TYPES OF SUGARS

SUGAR DESCRIPTION

Baker's Sugar Extra--fine, fine-grained
grained sugar with uniform grain size, gives perfect
shine & texture on baking. As its name suggests, it has been developed
specially for the baking industry.

Barbados Rich brown sugar having a nutty, caramel flavor, natural moistness,
and subtle molasses aroma. Nutritious substitute for table sugar

Barley sugar Granulated sugar melted to 185 deg C. No unique flavor or color
characteristics If heated to 200 deg C, it caramelizes.
characteristics. caramelizes

Brown sugar Light to dark brown sugar - with color & properties
erties depending on
inherent molasses content. Its natural moistness and deep, rich aroma
makes it ideal for full-flavored
full recipes.

Cane juice Produced by slow crystallization of a concentrated sugar solution, this
sugar is commonly used in Belgium beers.
beers. It comes in several colors -
light to dark. When added to beer, it thins out the high gravity beers
and contributes color and, for the dark version, some residual caramel
flavors.

Candy sugar Produced by slow crystallization of a concentrated sugar solution, this
sugar is commonly used in Belgium beers. It comes in several colors -
light to dark. When added to beer, it thins out the high gravity beers
and contributes color and, for the dark version, some residual caramel
flavors.

Castor sugar Sugar
ar with extremely fine grain size making it ideal for extra fine
(or caster sugar) textured cakes and meringues, as well as for sweetening fruits and
iced-drinks
drinks since it dissolves easily.
easil

Chinese sugar Finely crystallized refined sugar.

Cinnamon sugar Lightly colored granulated sugar with added flavoring.

Coarse sugar Large crystals of granulated sugar.

Coffee sugar Large grained, sparkling, brown-colored
brown colored sugar crystals specially
developed to bring out the true flavor of coffee beans
Equimolar mixture of glucose & fructose in liquid form. It absorbs
Invert sugar moisture very fast,
fast is about 25% sweeter than normal sugar,
sugar is highly
soluble in water and alcohol, and caramelizes fast

Demerara sugar Golden brown sugar crystals rolling with the rich aroma of tropical
sugarcane molasses. Its distinctive flavor and crunchy texture makes it
ideal for hot and cold beverages, sprinkling on cereals, or as a topping
on cakes and cookies

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Introduction

Sugar

Sugar,
ugar, or sucrose, is a carbohydrate that
occurs naturally in every fruit and vegetable in
the plant kingdom.
It is a major product of Photosynthesis, the
process by which plants transform the sun’s
energy into food.
Sugar occurs in greatest quantities in
sugarcane and sugar beets from which it is
separated for commercial use.
Table sugar (sucrose) comes from plant
sources.

In non-scientific use

The term sugar refers to Sucrose (Also called
"table sugar" or "saccharine")
a white Crystalline Solid Disaccharide.
Disac
Commercially produced table sugar comes
either from Sugar Cane or from Sugar Beet.

Scientifically sugar refers

To any Monosaccharide or Disaccharide.
Monosaccharide (also called "simple sugars")
such as glucose, store chemical energy which
biological
ological cells convert to other types of energy.

The word "sugar" principally refers to
crystalline sugars,, two important sugar
crops predominate:

Sugarcane

Sugar beets

Difference between sugar produced from sugar beets and sugar
produced from sugarcane?
arcane?

There is no difference in the sugar produced from either cane or beet.
Sugarcane, a giant grass, thrives in a warm, moist climate, storing sugar
in its stalk.
The sugar beet grows best in a temperate climate and stores its sugar in
its white root.
Sugar from both sources is produced by nature in the same fashion as all
green plants produce sugar - as a means of storing the sun’s energy.

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Sugar Cane

The plants are slow growing and require approximately 16
months to ripen.
Once cut, sugarcane can start to deteriorate quickly
(actually within hours of being harvested) thus it must be
processed immediately after cutting.
Sugarcane belongs to the genues saccharum, tribe
Andropogoneae, and family poaceae (Graminea).
Sugar cane is really a type of giant grass.
When it is fully grown, it can be as tall as four or five meters.
meters
Like all grasses, sugar cane has green leaves, a stalk and roots to collect
sunlight, moisture and carbon dioxide which it uses to make its own food.

Sugar cane grows best in tropical countries where it
thrives on a combination of bright sunlight, heat, heavy
rainfall and fertile soil.
New cane is grown from pieces of cane stalk,
Called setts, which are laid lengthwise in furrows which
have been cut in the field.
As the young cane grows, the land around it is cultivated
to control weeds and let air and water into the soil.
In moist, warm conditions, the cane grows quickly.
It is usually ready to harvest in 10 to 18 months.
Mature cane stands 2 to 4 metres high and is usually harvested between
June and December in the Southern Hemisphere, when its sugar content is
at its highest.
When the first cane is harvested, the stumps are left in the ground. New
canes grow from the stumps.
Two or three more crops can be produced
produc this way.
These are called ratoon crops.
Most cane sugar comes from countries with warm climates, such as Brazil, India,
China, Thailand, Mexico, and Australia, the top sugar producing countries
in the world.

Growing the Cane

Sugar cane is a sub-tropical
pical and tropical crop that prefers lots of sun
and lots of water - provided that its roots are not waterlogged. It
typically takes about 12 months to reach maturity although the time
varies widely around the world from as short as six months in Louisiana
to 24 months in some places.
places
Where it differs from many crops is that it re-grows
re grows from the roots so
the plant lasts many cycles [or 'ratoons', a word derived from the
Spanish to sprout] before it is worn out.

Harvesting

Sugar
ugar cane is harvested by chopping down the stems but leaving the
roots so that it re-grows
grows in time for the next crop. Harvest times tend
to be during the dry season and the length of the harvest ranges from
as little as 2 ½ months up to 11 months. The cane is taken to the
factory: often by truck or rail wagon but sometimes
on a cart pulled by a bullock or a donkey!

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Sugar beet

Beet sugar comes from regions with coole climates:
Northwest and eastern
ern Europe, northern Japan, plus some
areas in the United States (including California).

Cuba, the EU, Australia, Thailand, Brazil, Ukraine
(sugarbeets) and China are the largest exporters.
In the Northern Hemisphere, the beet-growing
beet season ends
with the start of harvesting around September.

Harvesting

In the growing and harvesting of sugar beet, timing is
critical.

The harvesting period, known as the 'campaign' amongst
farmers, takes place between September and Christmas
when the amount of sugar in the beet is at its highest.

Begins the middle of September and continues until
Completed, usually by mid-November.
mid
Sugar beet was harvested at five different times (123, 139,
155, 171 & 187 days after emergence).
emergence
Sugar beet provides more than one-
one half of sugar produced
in United States and about 40% of sugar
Production in the world.

Top Ten Countries by Sugar Beet Production 2008

According to the Food and Agricultural Organization of the United Nations, in
2007 the United States produced 31,912,000 tonnes of sugar beets,
beets which was
enough to make the United States Ranks Second in that category. France ranked
first, producing 32,338,000 tonnes.

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Ethanol from Sugar

More than half of world ethanol production is produced
from sugar and sugar byproducts, with Brazil being by
far the world leader.
Currently, there is no commercial production of
ethanol from sugarcane or sugar beets in the United
States, where 97 percent of ethanol is produced from corn

Technologically, the process of producing ethanol from sugar is simpler than
converting corn into
to ethanol. Converting corn into ethanol requires additional
cooking and the application of enzymes, whereas the conversion of sugar requires
only a yeast fermentation process. The energy requirement for converting sugar
into ethanol is about half that for corn.

Factors impacting sugar to ethanol viability

Corn is currently the least-cost
least feedstock available for
ethanol production. Ethanol from sugarcane or sugar
beet feedstocks costs twice as much.
USDA’s recent sugar/ethanol report provides these
comparative
mparative production costs.
High oil prices have spurred interest in ethanol, to put
it mildly.
But for how long? (Prices were dropping at press
deadline in September.)
With ethanol prices hovering near $4 a gallon this
summer, the USDA report concludes that t it would be
profitable to produce ethanol from sugar and sugar
byproducts.
However, if ethanol prices were to drop below $2.35 a
gallon, it would not be profitable to use raw or refined sugar as a feedstock.
Based on current futures prices, the price of ethanol is expected to drop.

The EU convert refined sugar to ethanol Market

Production and consumption

Europe’s fuel ethanol sector was a slow starter.
It took almost 10 years to grow production from 60 million litres
in 1993 to 525 million litres
litre in 2004.
In the following two years we saw a true explosion in production.
In 2005 and 2006 there were double-digit
double growth levels of over
70%.
After a moderate growth in 2007, when production increased by
13% compared to the previous year,
year figures reached another
spike in 2008.
Last year, total EU bioethanol production significantly
increased by 56%, from 1.8 billion in 2007 to 2.8 billion
in 2008.

Compared to the U.S.A. and Brazil, but also to the
European biodiesel sector, the EU fuel alcohol sector
sect is

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rather small. The USA nowadays produces every month
more than the EU produce in a year. Moreover, the EU
biofuel market is still predominantly a biodiesel market
(80%).

The top 4 EU producers of ethanol are France,
France Germany,
Spain and Poland, followed
wed by Sweden and the UK. The
top 6 consumers are France,
France Germany, Sweden, the UK,
Poland and the Netherlands.
Netherlands 2008 was also a record
year in terms of imports. Total imports of bioethanol (fuel and non-
non-fuel) are
estimated to have reached 1.9 billion litres in 2008, increasing by 400 million
compared to 2007. Thereof,
Thereof between 1.4 and 1.5 billion litres came from Brazil
only.
Approximately 50% of total imports have been used for the fuel sector
(approximately 1.1 billion litres).
litres This equals 39% of total EU production.

Production capacity

The EU production capacity is steadily increasing. At present, the installed
capacity amounts to 6.1 billion litres,
litres while production capacity under
construction is 2.4 billion litres.
litres

Use of raw material

In 2007 the preferred raw material was grain and, more in particular, wheat. A
relatively big part is still covered by sugar beet (molasses) and a smaller share is
produced from raw alcohol.
alcohol In 2008, due to higher grain prices, we have seen a
shift (mainly in Germany) to sugar beet juice.

If we look at the bigger picture of grain use in the EU it becomes immediately
clear that bioethanol production is only a marginal consumer of grain.

Almost 69% of Europe’s cereals go to the animal feed sector whereas
approximately only 2% of all cereals is destined for the bioethanol.
bioethanol.
Of this extremely small share about one third goes back to the animal feed sector
as a high protein animal feed called DDGS.
This by-product
product replaces imported soya meal.
meal

BRAZILIAN SUGAR

Brazilian sugar is the most plentiful sugar in the
world, due to the fact that Brazil is the largest
producer of sugar in the world.

Every year Brazil produces up to thirty million tons
of sugar, much of which is sold offshore.

The majority of Brazilian sugar is VHP raw sugar,
which is almost always produced for export and
subsequent refining in other countries.

A smaller amount of ICUMSA 45 sugar is also produced both for local
consumption and international export.

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Brazilian sugar exports make up 40% of total global
sugar exports, which explains how Brazilian sugar
comes to be found in baked goods, drinks, and other
foodstuffs the world over.

Producing Brazilian Sugar

Brazilian sugar is grown largely in the Sao Paulo region
of Brazil.
The majority of Brazil’s
zil’s sugarcane is produced in the
southern portion of the country. It is also produced in
northeast Brazil.
The State of São Paulo (mapmap) produces 60 percent of
Brazil’s sugar and accounts for 70 percent of Brazilian
sugar exports.
ane production occurs between
In the south, sugarcane
May and November.
In the northeast production occurs between September
and March.

The first sugar plantations and mills were founded in
these states by the Dutch, who used slave labor to
plant, harvest, mill and process sugar
sug cane into sugar.

Today there are still numerous sugar plantations and
mills in this region in spite of the fact that it is
considerably less fertile than the Sao Paulo region, not
to mention harder to harvest due to hilly terrain.

All sugar produced in Brazil is produced from sugar
cane,
of which there are many varieties.

Types of Brazilian Sugar for Export

Brazil exports large amounts of VHP raw sugar, in fact VHP makes up the bulk of
Brazilian exports.
VHP is very high pol sugar, a term that means that the
sugar has a high sucrose level.
VHP sugar is 99.4% sucrose.
sucrose Invented by Brazilians in 1993,
VHP sugar quickly became the world’s most popular sugar export.
Unlike other forms of raw sugar, VHP contains relatively few
contaminants and is easierier and quicker to refine than traditional
raw sugar.
Aside from VHP sugar, Brazil also exports refined
sugars from ICUMSA 150 to ICUMSA 45.
Large quantities of ICUMSA 45 especially are relatively
rare, as Brazil has largely based its sugar export
industryy on the export of raw sugar which is then
refined in the destination country at the buyer’s
expense.

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Brazilian Ethanol Production

Brazil is the world’s number two ethanol
producer and the leading ethanol exporter,
using sugarcane as its feedstock

Brazilian
razilian Sugar and Ethanol Industry

During the 2007/2008 harvest,
harvest Brazil crushed a
record amount of 496 million tons of sugarcane
and produced 31 million tons of sugar and 22.5
million cubic meters of ethanol. Around two-thirds
two
of the sugar produced in Brazil
Br (18.6 million tons)
was exported, with raw sugar accounting for
more than 65% of foreign sales.
sales

Year * Million
Gallons
2003/04 3,910
2004/05 4,068
2005/06 4,174
2006/07 4,719
2007/08 5,916
2008/09** 7,054

Source: GAIN report BR8013
8013, USDA Foreign Agricultural
Service, 2008.

U.S. and Brazilian Ethanol Comparison

The United States and Brazil are the two largest ethanol producers in
the world Together they account for almost 90 percent of world
production.

Country Million
Gallons
USA
U 6,499
Brazil 5,019
European 570
Union
China 486
Canada 211
Other 316
Total 13,102

Source: Renewable Fuels Association

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International Sugar Organization (ISO)

The ISO provides a forum for inter-Governmental
inter consultations
ions on key
sugar issues including ways of improving the world sugar economy. Its
primary objective is to ensure enhanced international cooperation in
connection with world sugar matters. It also provides extensive
information on the world sugar market and other sweeteners

The ISO is based in London,
London the 84 member states of the ISO represent
(based on data for 2007):
):

• 82% of world sugar production
• 66% of world sugar consumption
• 93% of world exports
• 38% of world imports

The ISO exists to administer the
th internationally negotiated 1992 International
Sugar Agreement (ISA), the objectives of which are:

• To ensure enhanced international cooperation in connection with world
sugar matters and related issues.
• To provide a forum for intergovernmental consultations
consultations on sugar and on
ways to improve the world sugar economy.
• To facilitate trade by collecting and providing information on the world
sugar market and other sweeteners.
• To encourage increased demand for sugar, particularly for non-traditional
non
uses.

The
he Global Alliance for Sugar Trade Reform and Liberalization

The Global Alliance for Sugar Trade Reform and Liberalization
brings together 85% of the world raw cane exports.
exports The Global
Sugar Alliance members (Australia, Brazil, Canada, Chile,
Colombia, India,
dia, Guatemala, South Africa and Thailand) are active
advocates to improve the world sugar trading environment.
Members work closely together to ensure the fair and equal
treatment of sugar and ethanol in the WTO negotiations on
agriculture so that markets
market are allowed to work.
The Global Alliance for Sugar Trade Reform and Liberalization was established
during in November 1999.
1999

The world’s sugarcane producers have the potential to contribute significantly to
the solution of two current global challenges:
• Climate change and
• Trade liberalization.
This was the focus of the declaration signed by the Global Alliance for Sugar
Trade Reform & Liberalization,
Liberalization whose members met on Wednesday (Oct.21/2009)
in São Paulo, Brazil to discuss matters of relevance to the
the international sugarcane
market. The Alliance represents over 85% of world raw sugar exports and has
been an active voice in the World Trade Organization’s (WTO) Doha Round
negotiations.

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World Food Price Inflation in 2007/2008

FAO Report

The upturn in international food prices that began in
2006 escalated into a surge of food price inflation
around the world, increasing food insecurity, leading
to violent protests and even raising fears about
international security.

Africa was perhaps hardest hit, but the problem was
global. Reports of the impact of high food prices on
the poor across many developing countries led to
calls for international action to reverse the slide
towards increased
poverty and malnutrition.

Food aid agencies such as the World Food Programme
(WFP) encountered difficulties in meeting the higher
costs of purchasing food for distribution and appealed
for additional funds.

The FAO food price index1
index rose by 7 percent in 2006
and 27 percent in 2007, and that increase persisted
and accelerated
ccelerated in the first half of 2008.
Since then, prices have fallen steadily but remain above
their longer-term trend levels.

For 2008, the FAO food price index still averaged 24
percent above 2007 and 57 percent above 2006.

Looking at prices in reall terms (deflated by the World
Bank’s Manufactures Unit Value Index [MUV]), the
increases are still significant.

Real prices have shown a steady long-run downward
trend punctuated by typically short-lived
short price spikes.

There is some suggestion of a flattening out since the late
1980s with a gradual recovery beginning in 2000 before
the sharp increase in 2006 – the average annual
growth rate of 1.3 percent for the period 2000–05 has
jumped to 15 percent since 2006.

Prices are commonly expressed in US dollars;
depreciation in the value of the US dollar reduces the
cost
of commodities for countries whose currencies are
stronger than the US dollar, resulting in a cushioning
of food price increases to a greater or lesser extent.
However, for countries whose
wh local currencies are pegged to or are weaker than
the US dollar, depreciation in the US dollar increases the cost of procuring food.
More than 30 developing countries peg their currency to the US dollar.

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Did the prices of all agricultural commodities
commodities increase in the same way?

While almost all agricultural product prices increased at least in nominal terms,
The rate of increase varied significantly from one commodity to another.
In particular, international prices of basic foods, such as cereals, oilseeds and
dairy products, increased far more dramatically than the prices of tropical
products, such as coffee and cocoa, and raw materials, such as cotton or rubber.

Therefore, developing countries dependent on exports of these latter products
found that while their export earnings might have been increasing this was at a
slower rate than the cost of their food imports.
As many developing countries are net food importers, this imposed a serious
balance of payments problem.

What was different about the 2007–08 food price increases?
?

The leap in food prices was in sharp contrast to the secular downward trend
and the prolonged slump in commodity prices from 1995 to 2002, which even
prompted calls for the revival of international commodity agreements.
For
or some analysts, the increases signaled the end of the long-term
term decline in real
agricultural commodity prices, with The Economist (2007) announcing “the
end of cheap food”.

Others saw the beginnings of a potential world food crisis.

It is an interesting
ng question whether these sharp increases are fundamentally
different from earlier price spikes and whether the long-term
term decline in real
prices could have come to a halt, signalling a fundamental change in
agricultural commodity market behaviour.

High-price
ice events, like low-price
low events, are not rare occurrences in agricultural
markets, although high prices often tend to be short-lived
lived compared with low
prices, which persist for longer periods.
What has distinguished this episode was the concurrence of the e hike in world
prices of not just a few but of nearly all major food and feed commodities and the
possibility that the prices may remain high after the effects of short-term
short shocks
dissipate.

The price boom was also accompanied by much higher price volatility2
volat
than in the past, especially in the cereals and oilseeds sectors,
highlighting the greater uncertainty in the markets.

In the first four months of 2008, volatility in wheat and rice prices approached
record highs (volatility in wheat prices was twice
tw the level of the previous year
while rice price volatility was five times higher).
The increase in volatility was not confined to cereals – vegetable oils, livestock
products and sugar all witnessed much larger price swings than in the recent
past.
gh volatility means uncertainty, which complicates decision-making
High making for buyers
and sellers.
Greater uncertainty limits opportunities for producers to access credit markets
and tends to result in the adoption of low-risk production technologies at the
expense of innovation and entrepreneurship.
In addition, the wider and more unpredictable the price changes in a commodity
are, the greater is the possibility of realizing large gains by speculating on future
price movements of that commodity.

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Annual food prices, in nominal and real US$
US terms, 1957–2008
1957

Thus, volatility can attract significant speculative activity, which in turn can
initiate a vicious cycle of destabilizing cash prices.
At the national level, many developing countries are still highly dependent
endent on
primary commodities, either in their exports or imports.
While sharp price spikes can be a temporary boon to an exporter’s
economy, they can also heighten the cost of importing foodstuffs and agricultural
inputs.
At the same time, large fluctuations
fluctu in prices can have a destabilizing effect on
real exchange rates of countries, putting a severe strain on their economy and
hampering their efforts to reduce poverty.

The end of “cheap food”?

Soaring food prices came as a shock partly because consumers
umers throughout the
world had become accustomed to the notion of so-called
called “cheap food”.
Up until 2006, the real cost of the global food basket had fallen by almost one-
one
half in the previous 30 years,
years with prices of many foodstuffs falling on average by
2–3 percent per year in real terms.
terms
Technological advances greatly reduced the cost of producing foodstuffs and this,
Together with widespread subsidies in countries of the Organization for
Economic Co-operation
operation and Development (OECD) that rendered more
Efficient and cheaper production elsewhere unprofitable, entrenched the
Role of a few countries in supplying the world with food.

This supply-driven agricultural paradigm sent real prices spiraling downward on a
trend lasting for decades.
Added to this, changes
hanges in the market and policy setting have been
Instrumental in reducing stock levels and have led to far more planned
dependence on imports to meet food needs.
Put together, these developments have resulted in a significant role for major
exporting countries
ntries to supply international markets as needed. Therefore, it is not
Surprising that when production shortages occur in such countries, particularly in
consecutive years, global supplies are stretched and the ensuing market
tightness is manifest in both higher prices and higher volatility.
This was precisely the case in the run-up
run to the recent price surge.

Against this backdrop, the world’s growing demand for agricultural commodities,
driven by rising global incomes and population and then expansion in i biofuel
production, left major exporters with little opportunity to replenish stocks.
Extreme price volatility for several commodities was another factor
Prompting fears of a wide-scale
wide crisis.

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Sugar(World Production - Supply and
Distribution)

PRODUCTION

World sugar production to decline by 9 million
tonnes in 2008/09.
FAO has revised its estimates for world sugar
production to 158.5 million tonnes in 2008/09,
which is 2.5 million below the first estimate
released in November 2008, and 9 million tonnes,
or 5.4 percent less than in 2007/08.
The revision was largely caused by a deterioration
of production prospects in India, where sugar
output is now estimated to have fallen by a drastic
45 percent.
The drop would ensue from a decline in planted
area,
a, as many producers allocated land to
alternative, more remunerative, crops, such as
maize and soybeans.

World production and consumption of sugar

2007/08 2008/09 Change: 2008/09
Change
2006/07
estim f’cast over 2007/08
million tonnes %
WORLD BALANCE
Production 166.1 167.6 158.5 -5.4
Trade 46.7 47.3 50.2 6.0
Utilization 154.0 158.4 162.2 2.4
Ending stocks 73.3 80.9 76.3 -5.7
SUPPLY AND DEMAND
INDICATORS
Per caput food consumption:
World kg/year 22.5 23.1 23.4 1.3
LIFDC kg/year 12.9 13.4 13.7 1.8
World stock-to-use
% 47.6 51.1 47.0
ratio

Change:
2007 2008 2009*
Jan-May 2009
Jan
over
Jan-May 2008
Jan
ISA Daily Price Average %
(United States
10.08 12.80 13.78 8.8
cents/lb)

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In addition to India, sugar production contracted in Australia, the
European Union, Pakistan and the United States, with relatively small
decreases foreseen in Thailand.

However, in the Latin America and Caribbean region, sugar production in
Brazil (October/September) is expected
expe to rise to 39.6 million tonnes in
2008/09, about 29 percent more than in 2007/08, despite heavy rains at
harvest time, which reduced yields.

Sugar-cane
cane production is set to reach 566 million tonnes, which
corresponds to a 15 percent increase from last
last year, on account of a
12 percent expansion in cane planted area.

It is estimated that about 60 percent of Brazil’s 2008/09 sugar-cane
sugar
harvest will be processed into cane-based
cane based ethanol, buoyed by higher
returns from domestic ethanol relative to export markets.
ma

However, if international sugar prices continue to augment, providing no
upsurge in crude oil prices, the share of cane directed to sugar should be
expected to increase. Elsewhere in the region, sugar production in
Colombia is expected to increase by 3 percent in 2008/09, while it should
remain relatively unchanged in Argentina and decline slightly in Peru.

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Industry structure and development

Brazil with consistent and considerable increase in cane production
continues to remain the
th dominant sugar producer.
India is the second largest but with a chequered track record of wide
swings in year on year sugar production.
India however remains unchallenged as the top sugar consumer despite
low level of per capita consumption. Cane sugar has steadfastly displaced
beet, trouncing the share of latter from 43.5% in the 1960ss to 20% now.

World sugar production during 2008-09 has displayed a discernible
decline due to decisive downfall in Indian production.

Accordingly world sugar balance would
w turn deficit by 7.8 mln tonnes.
tonnes
The deficit would have loomed larger but for the relentless rise in
Brazilian cane production and usage of relatively larger share of cane
crop for sugar with concomitant decline in the share of ethanol.

conomic recession world over, sugar consumption growth
Despite the economic
was less impacted and remained positive. The supply-demand
supply demand
disequilibrium has been caused essentially by the strident slippage in
Indian production, exacerbated by the decline in EU and other Asian
countries.

Source: ISO

The correction after surging surplus for two years in a row has come as
good relief to sugar producers world over. Such tightness in supply is
sure to be witnessed during 2009-10 as well.

rld export is expected to overshoot the half way mark
Brazil’s share in world
to 53% this year as against 29% a decade ago.

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Sugar Futures and Options Trading

Located at ICE Futures U.S. in New York City,
the exchange is the premiere world market for
the trading of coffee, sugar
sug and cocoa futures
and options. Three sugar futures contracts
(world raw, world refined, and domestic raw)
are listed at ICE. In 1982,
1982 the exchange
launched the nation's first exchange-traded
exchange
option on a futures contract when it introduced
options on world
orld sugar futures.

The Role of the Exchange

Since all futures and options contracts are
standardized (with delivery months and
locations, quantity and grade constant), only
price is negotiable.

These prices are determined by "open outcry"
trading on the
he exchange floor. The scene on the
trading floor resembles an auction of sorts, with
competing buyers and sellers shouting and
gesturing.

While this might appear chaotic to the casual
observer, the open outcry method assures that
each trade is openly and competitively executed.

With open outcry, all market participants are
afforded the opportunity to buy or sell at the best
available current price.

All trading activity is closely monitored by the
exchange according to guidelines established by
the CFTC.
FTC. The exchange is committed to
maintaining markets of the highest quality.

To help fulfill this self--regulatory mandate, ICE
Employs advanced technological systems to
perform a variety of surveillance and compliance
procedures.

Trading Sugar Options

In 1982, the exchange introduced options on
world (#11) sugar futures - the nation's first
exchange -traded
traded option on commodity futures.
Because options strategies are numerous and
can be tailored to meet a wide array of risk
profiles, time horizons and
an cost considerations,
hedgers and investors have increasingly realized
their vast potential.

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ISO World Sugar Market Review
as at : 20 November 2009
In the third assessment of the ISO, world sugar
production is put at 161.527 mln tonnes.
A significant production shortfall in India and a further Jan-10
Jan 22.20
contraction of production in the EU, on the one hand, 22.74
Mar
Mar-10
and a continuing expansion of sugar output in Brazil,
on the other hand, are the three major supply features May
May-10 21.86
of 2008/09. Jul
Jul-10 20.43
Oct
Oct-10 19.73
The combined effect of output reductions in the EU and Mar
Mar-11 19.33
India is expected
ted to shave off a massive 7.084 mln
May
May-11 18.12
tonnes from world sugar supply, despite record high
growth in sugar output in Brazil. So far, a lowering in Jul
Jul-11 17.28
forecasted production in India (from 23.9 mln tonnes Oct
Oct-11 17.08
projected in August to the current projection of 19.55 Mar
Mar-12 16.63
mln tonnes) has been neatly matched by a practically
identical increase in Brazil (from 33.22 mln tonnes to AUD/USD 0.919
37.54 mln tones).
USD/BRL 1.73
Meanwhile, global consumption is forecasted to grow USD/THB 33.20
at the rate of 2.19% to 165.801 mln tonnes, raw value.

World production is now
no expected to be 4.274 mln tonnes lower than
world consumption as against 3.626 mln tonnes projected in November.
November
Consequently, the statistical outlook for the market till the end of the
season in September 2009 remains constructive and supportive to world
market values.
The ISO puts world export availability for 2008/09 at 49.608 mln tonnes,
raw value, as against 46.25 mln tonnes in the previous crop cycle.
cycle

Smaller output in importing countries and in India, in particular, is
expected to trigger additional
additional import demand which is estimated to reach
49.621 mln tonnes, up 3.673 mln tonnes.

A summary of the third assessment of the world sugar balance in
2008/09 is provided in the table below.
below

World Sugar Balance
2008/09 2007/08 Change
(mln tonne, raw value) in mln t in %
Production 161.527 168.611 -7.084
7.084 -4.20
Consumption 165.801 162.241 3.560 2.19
Surplus / Deficit -4.274 6.370
Import demand 49.621 45.948 3.673 7.99
Export availability 49.608 46.245 3.363 7.27
End Stocks 66.272 70.533 -4.2611 -6.04
Stocks/Consumption ratio
39.97 43.47
in%
Source: ISO quarterly market outlook,
outlook February 2009

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