Why prices of sugar, corn are high?

Published by rudy Date posted on April 18, 2011

DAVAO CITY — Sugar supply has been declining worldwide not because more people are consuming more sugar. As global demand is now outpacing sugar supply and production worldwide, sugar prices have been rising to levels not seen since the historic highs of 1975 and 1982.

Since sugar and corn are now being used as raw materials for the production of ethanol — used to mix with gasoline to make clean “eco-fuel” — consumption of these two essential commodities is being diverted more and more for industrial use. As such, we’re likely to see less and less sugar supply available for consumers worldwide.

That was why we’re not surprised when investors from China and South Korea came scrambling over each other looking for huge farm areas to plant sugarcane in northern Luzon and central Visayas. These two countries are some of the world’s biggest importers of sugar since Brazil, the world’s top sugar producer, is now using sugar to make ethanol.

As an ordinary consumer of table sugar for my breakfast coffee, I still find it so difficult to imagine car drivers using sugar alcohol to run their cars. But it’s happening now all over the world amid a global effort to find cleaner fuels to slow down the pace of global warming.

Even large producers of livestocks like chicken and hogs have more reasons to worry about the future of corn feeds since a big chunk of global corn has been set aside to produce ethanol. This also explains why the price of yellow corn which is used to make feeds for livestocks has become so expensive for the world’s corn importers.

Way back in 2007, yellow corn No. 2 was offered for only $216 per metric ton C&F delivery to Iran by our Brazilian friend Denio Ayres, president of WRB Commercial Exportadora Ltda to Iranian buyer Nasser Sohi who found the price “too high” for importers and distributors in Tehran, Iran.

Now, Iranian buyer have no choice but to get that yellow corn from Brazil for as high as $600 to $700 MT — and all because the annual production for this commodity has been divided for both consumer and industrial use. PNA

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