Would you like your ethanol to depend on the Indian monsoon season? From the BBC
The price of raw sugar has increased to its highest level since 1981, as supply concerns grow.
Raw sugar futures added 3% on Monday, to finish the day at 22 cents a pound.
"The main problem is a deficit in sugar supplies," said Nick Penney, a trader with Sucden Financial, a firm that focuses on sugar trading.
Growing demand in Brazil for sugar to be turned into ethanol, coupled with a sharp fall in Indian production, have both prompted worries, he explained.
Sugar production in India for 2008-09 fell 45% year-on-year, according to a report by Sucden.
And a "drastic fall" is expected for the coming Indian crop, it said.
India had less rain in the monsoon season and it was also uneven, damaging a number of agricultural crops.
The price was under thirteen cents in April. Note that both a change in supply and in demand happened here (see the italicized paragraph) which means we have much higher prices without anyone really getting more fuel or sugary products.
Labels: economics, Energy, gas