Sugar rose in London as Goldman Sachs Group Inc. predicted higher prices for the sweetener on concern about global harvests.

The bank increased its three-month price forecast for raw sugar to 20 cents a pound, analysts led by London-based Jeffrey Currie wrote in a report today. Goldman Sachs boosted its six- and 12-month estimates to 16 cents from 12 cents. Raw sugar headed for a sixth weekly gain in a row in New York.

"Uncertainty over the 2010-11 crop will likely become the main driver for sugar prices over the coming months," the analysts said. "Adverse weather over the past months points to lower-than-previously-expected production for both Brazil, the largest producer and exporter, and Australia, the third-largest exporter."

White, or refined, sugar for December delivery gained $7.40, or 1.2 percent, to $615.60 a metric ton at 9:41 a.m. on NYSE Liffe. The contract climbed for a 13th day in 14.

Pakistan yesterday formed a panel to report on sugar imports to ease a shortage estimated at 1.2 million tons next year. The panel will make its assessment on overseas purchases within a week, the Industries Ministry in Islamabad said in a statement yesterday. Floods destroyed 200,000 acres of sugar cane, a farm group in the South Asian nation said last month.

Eoin Treacy's view Sugar prices have been recovering over the last few months in a steady progression of higher reaction lows. The US traded contract is a little overbought in the short-term but has held above 20¢ since September 2nd and a sustained move below that level would be required to question the consistency of the short-term uptrend. A decline below the 200-day MA, currently in the region of 18.75¢, would be required to question medium-term upside potential.

Against a background of appreciating soft commodity prices, companies leveraged to higher food prices such as fertiliser producers or those with the ability to pass on input prices hikes such as some food processors are likely to attract investor interest. Tate & Lyle caught my attention earlier this week because it appeared in the list of European shares that had increased dividends every year for the last consecutive 10-years. It currently yields 4.95% and while it had a poor last quarter which saw its P/E soar, the estimated P/E is back down to a more reasonable 11. If earnings come in as expected the dividend cover and payout ratios should also fall back into line.

The share did very well back in 2006 as sugar prices rallied on increased ethanol production but failed to benefit from the subsequent performance of the commodity and posted a progression of lower rally highs for more than 2 years. It broke this sequence in August 2008 and be ranging mostly above 400p since. It is currently rallying from the lower side of this range and a sustained move above 500p will reaffirm the medium-term uptrend.

This article by Hannah Kuchler for the Financial Times dated July 1st indicates that Tate & Lyle have sold their sugar manufacturing operations to concentrate on their core speciality ingredients section of which sugars and sweeteners are a major part. I have no additional information on whether this will allow the company to pass on higher input prices to its customers but the chart action suggests this may be the case.