The global sugar price has pushed to a four-year high as the world runs short on the sweet commodity.
Sugar futures jumped more than 6 per cent in trading on Friday in New York, with the October contract closing at 21.78 US cents per pound after peaking at 22.86 cents.
In Australian dollar terms, it equates to an indicative price of about $640 per tonne, double what it was at the same time last year.
Queensland Sugar Limited’s (QSL) Dougall Lodge said after years of a surplus on the world market, the transition to a supply shortfall was being realised.
“We actually don’t think it’s done yet … it’s basically just down to the fact that there are more buyers than sellers,” he said.
“This has been a dramatically move.”
Sugar has been one of the best performing commodities this year, with the global prompt price soaring more than 40 per cent since the beginning of the year.
“Expect more volatility … we will be expecting some downside days but we certainly think there will be more potential for upside,” Mr Lodge said.
“The March ’17 [contract] is actually trading at a higher level, 22.5 cents is where it settled and it almost hit 23 cents.”
The price jump is a turnaround in fortunes for Australian cane growers who have seen bitter returns due to five years of surplus in the global market.
Wet weather hampers Australian harvest
Mr Lodge said the most recent spike in trading was likely sparked by a downgrade in the crop outlook for Brazil, the world’s largest sugar producer, and comes on top of reduced production in India and Thailand this year.
Wet weather has also hampered the Australian crush of 36 million tonnes of cane this season.
About 60 per cent of the crop is yet to be harvested and growers in north Queensland will need a run of warm, dry weather to play catch up over spring.
Australia is the third-largest supplier of raw sugar in the world, with production valued at more than $2 billion