UK Sugar

Sugar is a sweet treat that also has uses in the production of biofuels, making it an important international commodity for global traders and a range of industries.

Most commercial sugar is derived from two main sources - sugar beets and sugar cane - with sugar cane the raw ingredient for around 75 per cent of global sugar production.

Around 69 per cent of the world's sugar is consumed in its country of origin, meaning just 31 per cent of global production is made available to international markets for trading.

In 2007-08, Brazil was the largest producer of sugar, delivering 31.3 million tons; India produced 28.8 million tons; the EU produced 17.57 million tons and China produced 14.6 million tons of sugar.

Public health concerns can have an impact on UK sugar prices, as the commodity is a key ingredient in sweets and other confectionary. As a result, large-scale shifts in opinion regarding the dangers of consuming too much sugar can have an adverse impact on demand and therefore prices.

Ethanol and biofuel commercialisation has also played a key role in sugar pricing over recent years, with rises in the value of global crude oil pushing up sugar costs as demand for ethanol increases as traditional fuels become more expensive.

For example, sugar prices increased by 22 per cent in the first half of 2008 in response to rising oil prices and a weakening dollar.

Several exchanges trade in sugar each day, including London's NYSE Liffe, the Intercontinental Exchange, the Zhengzhou Commodity Exchange and the Brazilian exchange BM&F Bovespa.

Sugar prices are often subsidised in countries around the globe, as many of the producers of the commodity rely on sugar as one of their main exports. This means shifting government policies can also have an impact on global sugar commodity prices, meaning political instability can make it more difficult to predict the sugar futures market.