sugar demand, page-2

The Motley Fool
Examining the global sugar tradeChina, India and Brazil boast three of the biggest economies in the developing world. All three nations are simultaneously experiencing a parallel development that puts profits for many food makers at risk.

Recent economic booms in China and India have led to people moving to cities and demanding more of certain goods as their lifestyles change. Meanwhile, agricultural production has decreased, making sugar more of a hot commodity.

India, a huge producer of sugar, is also one of the world's largest consumers of it. Last year, demand finally outpaced production, and India became an importer of sugar. In China, sugar consumption has risen by nearly 50 percent in the past 10 years, in part because of the growing popularity of soft drinks.

Brazil's economic growth has been slower, but it's pushing hard to make its economy run on sugar -- or rather, ethanol derived from sugar cane. With its governmental goal of having all the country's cars ethanol-capable by 2011, Brazil is likely to consume a lot of sugar.

Sugar prices surged 35.5 percent in 2004-2005, according to the Food and Agricultural Organization of the United Nations. Demand is expected to outstrip supply in 2005-2006 as well, leading to still-higher expenses for makers of soft drinks, candy and more.

Fortunately, price increases are prompting sugar producers to bump up production. Still, the tight supply doesn't leave much room for error.

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