Gur could threaten world's return to sugar surplus ...

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A revival in the popularity of gur in India could upset forecasts of a healthy surplus in world sugar production next year, and help underpin prices of the sweetener, a leading analyst has said.

The comments came as sugar jumped more than 3% in New York to cross 17 cents a pound for the first time since April.

Kona Haque, a commodities analyst at Macquarie, said that many forecasts, including the bank's own, of a return to excess world sugar production, after two years of deficit, assumed that increasing amounts of cane would continue to be diverted from making gur to manufacturing sugar.

Production of gur, a crude cane-based sweetener popular in rural areas of India, has taken a back seat since sugar prices soared, with US attaches in New Delhi expecting a fall of some 15% in output in 2010-11.

However, such assumptions may prove misguided, now that the correction in sugar prices since February has driven them below the price of gur, which typically accounts for about 40% of India's cane crop, Ms Haque said.

'Gur risk'

"Everyone is expecting India to show a big increase in cane production," Ms Haque told farm investors.

"But we do no know how much will go to sugar as opposed to [alternative sweeteners].

"More manufacture of gur is an alternative option. That is one risk you do need to think about in terms of India's [sugar] production rebound."

Ms Haque added in comments to Agrimoney.com that gur was a risk to assumptions of a return to world sugar surplus, but felt that another year of deficit was "unlikely".