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The world sugar price bolted this week, lifting about 15 per cent to over 22 US cents per pound.
In Aussie dollar terms the price has surged beyond $700 a tonne — which is up nearly $100 a tonne since September 11.
"It's gone ballistic," one analyst told ABC Landline.
Director of Green Pool Commodities, Tom McNeill, said the "massive hike" in prices happened for a combination of reasons.
He believed it started with news some cane crops in Brazil had been destroyed by bushfires.
"We understand maybe 3-5 million tonnes of cane in Brazil were impacted," he said.
"But the bigger factor is the drought in Brazil.
"I think the fires were a dramatic event that made the market focus on how much has already been shipped [out of Brazil], what little there is to ship in the next quarter, and that yields [in Brazil] are falling sharply."
Sugar futures have surged this week. (ABC Landline)
Mr McNeill said the market appeared to be slowly realising that global supplies were tight.
He estimated there would "easily" be a deficit of 1-2 million tonnes of sugar in just the first quarter of 2025.
"The realisation has set in that by quarter one and quarter two of 2025, there's going to be a very tight situation in the sugar market," he said.
Weather disruptions in other key sugar-producing nations like India and Thailand have also added pressure to global stocks.
Tom McNeill of Green Pool Commodities says sugar prices had a "massive hike" this week. (Supplied: Tom McNeill)
Queensland Sugar Limited (QSL) wrote on its website this week that "bullish momentum" had pushed the March 2025 [and October 2024] contracts to a five-month high, with sugar prices going "above the key psychological 22 US cents per pound level".
"It seems the bearish outlook on the Centre South Brazil harvest has finally caught the attention of the speculators," it said.
Mr McNeill said the price turnaround this week had been "staggeringly quick" and he expected some growers to be locking in prices.
"These are substantially better prices then we've been seeing lately," he said.
"The Aussie dollar is strengthening at the same time, which takes a tiny bit of the shine off.
"But really, this big move in sugar prices will do growers and sugar mills a lot of good."
Sugar futures have been on the slide for most of 2024, but last year reached highs of over $800 a tonne.
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