According to a Bloomberg report, sugar prices in New York and London are on the rise due to increasing worries over limited supplies. The white-sugar futures in London have gone up by 2.7%, hitting their peak since November 2011. This has caused the white premium, which indicates the price difference between raw and refined sugar, to reach unprecedented levels during Tuesday’s trading, although it has experienced some decrease in gains.

Also Read: Great Relief For Consumers, Crude Oil Dipped By 0.05 Per Cent; Check Today’s Petrol-Diesel Rates

At the same time, the raw sugar in New York concluded at a 2.6% increase, hitting its maximum level since October 2016.

The price hike is due to a shortage of deliverable sugar just before the May contract for white sugar expires on Friday. The open interest, which refers to the number of contracts to be settled, indicates a potentially enormous delivery exceeding 880,000 tons, according to John Stansfield, a senior sugar analyst at DNEXT Intelligence. He further explained that those with short positions lack the actual sugar to deliver.

The surge in sugar prices is attributed to the expectation of limited sugar exports from India, combined with weak supplies from several other countries, including Thailand, Europe, China, and Mexico.

Soren Jensen, a well-informed market observer, noted that India, a major exporter of white sugar, has almost depleted its sugar shipment quotas, with no indication of an increase.

Also Read: Shop with Ease: ICICI Bank Brings EMI Facility for UPI Payments

Jensen stated that India’s sugar refining sector may soon shift from domestically produced raw sugar to imported sugar, most likely from Brazil. While Brazil has recently commenced its harvest, there are transportation bottlenecks to contend with, as sugar competes with a record soybean crop for railway and port space.

Furthermore, he expressed concern that Brazil may not export as much sugar as anticipated at the start of the season, despite the market’s strong need for Brazilian sugar.

The slow production in India and lackluster supplies from countries such as Pakistan and Thailand have fueled concerns about the availability of raw sugar, resulting in a 5% surge in prices this week. The recent rally in oil prices is also contributing to the rise, with the potential for Brazilian and Indian mills to channel more cane towards producing ethanol.