After panic spread last year as the price of Sugar rose due to poor weather conditions in Brazil and India, things look hopeful as prices become more stable. Sugar production is seasonal and is heavily affected by weather conditions. Last year India struggled to produce sugar due to a long drought after the Asian Monsoon. While India was waiting for water, Brazil struggled to keep the water away as it had heavy rains which created waterlogged crops.
Production has turned around quickly as sugar is now being traded at half the price it was selling at last February. Both Brazil and India’s sugar industries are stabilizing, and corporations that depend on importing sugar are very relieved. Brazil expects that the 2010-2011 season harvest will be the largest in history, with a projected 33.5 million tons of sugar to be produced. Sugar harvested in Brazil is now being used more for energy production than food use. Many new cars in Brazil rely on biofuel made from petrol and alcohol. This means a new demand for sugar production. In the last few years 60% of Brazil’s sugar has been turned into ethanol. There is a very large market for “flex fuel”, and sugar is also becoming a demand for creating bio-electricity as well. Brazil is currently producing more electricity than it can use, so it acts as a major export to the Brazilian national grid.
Right now Brazil is a leader in the industry, using sugar production for bio-fuel and bio-electricity. In 2020 10% of transport fuel will be required to come from renewable sources in the European Union. This could greatly increase the reliance on sugar for energy sources. Sugar production in India is set to reach 25 million this year, and being a large contributor to the industry, India should also consider sugar as a renewable energy source.