Sugar has been on a tear since last October. At the end of August it had doubled in price. It has given back 10% so far in September.


This appears to be a supply and demand story. Global production is down due to weather, while demand is increasing. This chart tells that story.


Like with most things, it is never just visible conditions that influence prices. There is always a side story. For example on August 13th the WSJ revealed a letter from some of the big sugar players. No doubt but that this had something to do with the late August spike in the price. From the article:

"Some of America's biggest food companies say the U.S. could "virtually run out of sugar" if the Obama administration doesn't ease import restrictions amid soaring prices for the key commodity. In a letter to Agriculture Secretary Thomas Vilsack, the big brands -- including Kraft, General Mills, Hershey. and Mars -- bluntly raised the prospect of a severe shortage of sugar used in chocolate bars, breakfast cereal, cookies, chewing gum and thousands of other products."

This kind of talk from credible players encourages hot money. But when it started to rain in India at the beginning of the month the sugar market was overbought and ripe for a correction. One can only hope that the folks at KFT, GIS and HSY were able to buy low and sell high. They certainly were in the catbirds seat on this one.

There is a wild card in the sugar story. It is called STEVIA. My nose tells me that there is money to be made with this. I haven't figured out how.

This is an old and interesting story. In 1981 the FDA approved
Aspartame. In the late 70's none other than Donald "Rummy" Rumsfeld was the CEO of G. D. Searle. Shorty after the inauguration of Ronald Reagan the new FDA head approved Aspartame. This decision made NutraSweet. It made G.D.Searle. It gets better.


Stevia is a plant that is also a sugar source. It has been used in Japan for the past fifty years.