Demand for sugar from nations in Southeast Asia including Indonesia was "particularly strong," Queensland Sugar Ltd., Australia's largest exporter, said on July 6. Demand in Asia exceeds annual supply by 30 percent in key markets, Wilmar International Ltd. said the same week after agreeing to buy CSR Ltd.'s Sucrogen unit, Australia's top miller.

"Global stocks have run down to the lowest level in two decades and this is a major cause for firm sugar price," said Uhlenbrock. Worldwide stockpiles are expected to be 32.7 percent of consumption, equivalent to 119 days, in the year to Sept. 30, compared with 139 days last year and 170 days the year before, according to Uhlenbrock.

Eoin Treacy's view Sugar stockpiles have been falling for the last few years and while the prospect for good harvests in India and Brazil may contribute additional supply this year, the market for the commodity continues to tighten. The US traded ICE contract is currently in contango from October to March but in backwardation from March 2011 onwards. The LIFFE contract is in backwardation from August through October and December.

White sugar prices fell precipitously from their January high near $770 and began to find support in the region of upper side of the two-year base from April. Prices are currently testing the upper side of the two month range below $550. A downward dynamic would be required to indicate renewed resistance in this area and question scope for further upside.

US traded Sugar has had a steadier advance over the last few weeks and is currently testing the April highs near 18¢. A sustained move below 15¢ would be required to question scope for continued higher to lateral ranging.

David has also commented on sugar almost daily in the Subscriber's Audio.