London, July 31 - Sugar prices are expected to find support on a tightening global supply outlook for the sweetener, despite weakness in other commodities, London-based trade house ED&F Man said on Thursday.
"After the big falls seen in the middle of July, sugar prices have found some support in the last week, possibly bolstered by the fundamental picture," ED&F Man said in its latest monthly report.
"This in a backdrop of significant falls in most other commodity groups, including perhaps most notably, oil," it added.
"As the tighter market seen by many in 2008/09 slips closer, sugar could well continue to find support, despite the current direction of other commodity groups."
Sugar production in Brazil, the world's top producer and exporter, lags last year by more than one million tonnes, with preference continuing to be given to ethanol, ED& F Man said.
Demand for Brazilian sugarcane-derived ethanol biofuel is growing, due to high oil prices.
"Meanwhile, production prospects for India (the world's number two sugar producer) for their next crop are seemingly being marked down continually," Man said.
Some rebound will be seen in Brazilian sugar production as weather prospects are favourable for the remainder of the harvest, the trade house said.
Additionally, recent rains in Maharashtra could well improve the India situation, it added.