JEDDAH: Sugar prices in Saudi Arabia have recently jumped more than 20 percent and are expected to surge further in the near future as local traders have begun importing sugar at higher prices due to weaker global supply, dealers said Saturday. Prices started to rise more frequently with the beginning of the import season and the signing of new contracts in October, Salem Al Hadi, a manager of a local food distribution company, said. He added that traders will be forced to increase prices with the depletion of inventories purchased at old prices. Forecasts of a sharp surge in prices come at a time sugar production in major producers is expected to decline, according to international analysts. Brazil, the world's largest sugar producer, accounts for 54 percent of global exports, according to the US Department of Agriculture. Growers in the region will produce “at best” about 33 million to 34 million tons next year, little changed from this year, he said. Industry group Unica in August forecast output in the Center South to total 33.7 million tons this year. Sugar producers in the Center-South, Brazil's main producing region, plan to replant about 1.4 million hectares (3.5 million acres), or 20 percent of their farmland, to replace aging plants, said Paulo Roberto de Souza, chief executive officer of Copersucar SA, the Brazilian cooperative that ships more sugar than Thailand, the world's second-largest exporter. Copersucar is a Sao Paulo-based sugar and ethanol cooperative with 43 associate mills. It plans to export 6 million tons of the sweetener next year. Thailand plans to ship 4.7 million tons next year, according to the US Department of Agriculture. Brazil's Center-South, where about 90 percent of the country's sugar and ethanol is produced, will replant farmland between January and March, Souza said. That means new crops won't be ready when the harvest starts in April, he added. The move will bolster sugar prices because it will probably lead to an unexpected deficit in the 2011-2012 crop year, following a global surplus this year, Souza said. On Nov. 17, the International Sugar Organization forecast a 2.5 million-ton surplus in 2011-2012, up from an excess of 1.3 million tons this season. Sugar prices have surged 98 percent since mid-May and touched a 29-year high on Nov. 9 on concern that exports from producers such as India may trail expectations. Prices will likely stay above 25 cents a pound in the first half of next year, Souza said.
