Oil isn’t the only bad-news commodity story. Sugar is another example of a hot commodity that’s turned ice cold, and some folks are blaming, at least in part, the weather. It was only six months ago that commodity experts were painting a rosy future for sugar, with prices doubling in the year before March and some, like Andreas Meyer of Vienna-based Merit Alternative Investments and Michael Coleman of Aisling Analytics in Singapore, predicting another 40% boost. What they didn’t count on, however, was good weather, which led to a record crop from Brazil, the world’s biggest sugar grower, as well as huge harvests from two other major producers, India and Russia. In addition, the demand for alternative fuels that use sugar soured as gas prices started to run out of steam. So instead of rising 40%, sugar prices plummeted 34% as of Aug. 31 - reported to be the largest five-month decline in seven years. Meteorological conditions have wreaked havoc not only on sugar, but also corn and soybeans, which have sunk 17% since early July, but rather than being the victim of good weather, those commodities saw a bumper crop as a result of bad weather, in the form of all the rain they needed. Back to sugar, Meyer told Bloomberg News, “We are in a correction phase for sugar that could go on until the end of the year. It was speculation that killed sugar prices.” Meyer noted that she still believes sugar will turn out sweet for investors but it may take another two to three years to do so.
