Sugar Binge

Few world commodities can excite international passions the way sugar does. Just a whisper that there would be a shortage (caused by a poor European crop and a drastic fall off in Cuban output) was enough to send sugar prices off on a speculative binge that in recent weeks shot the U.S. raw sugar price up to $13.20 per hundred pounds v. $6.60 in January. As everyone knew it had to, the bubble broke--and last week sugar prices came tumbling down to $10.50 by week's end, with no sign of slowing.

Because of sugar's peculiar marketing arrangements, the reaction in the marketplace to the prospects of a shortage was more violent than the facts warranted. Most of the big sugar-using nations grow enough beet or cane sugar to supply a great part of their own needs, and they contract in advance to import the extra sugar they need. The result is that only about 10% of the world's requirements are sought for on the open market. The bidding by so many for this small amount started the price rise; and when the U.S. last month declared that it was going to buy an extra 650,000 tons on the global market, the price soared.

Agriculture Department experts do not expect the world shortage to last long. The European beet crop planted this spring is doing much better than anticipated, and the high prices have set sugar growers the world over to laying plans to increase their production.

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