A spike in raw sugar prices which powered the market to a 29-year peak just three months ago has been scuppered for good, and some in the trade are wondering if the fall will be as fast as the rise. Sugar may have another 20 percent to fall this year even after more than halving since hitting a 29-year high just three months ago, if past super-spikes of the 1970s and 1980s are any guide.

The sugar market has changed dramatically in the past three decades with the advent of ethanol, the rise of Brazil and decline of government intervention.But this year's collapse in prices revived memories of previous boom-bust cycles in which prices rapidly recoiled to pre-spike levels within 3 years.

In both the 1974-76 cycle and the 1979-82, prices quintupled or more from below 10 cents -- only to fall back below 10 cents again.In the 1970s, raw sugar peaked above 60 U.S. cents a lb. It again punched up in the 1980s to around 45 cents. After scaling such heights, prices in the 1970s slid to a low just above 5 cents by 1978. Raw sugar spiked anew in the early 1980s, and then plunged to below 5 cents around 1985.

To read  a detailed analysis on sugar prices read this.

Source: flex-news-food.com