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Sugar is pictured at the Loblaws at Maple Leaf Gardens in Toronto on Wednesday, July 23, 2014. Just as cane harvests expand in India and Thailand, farmers in Brazil, the world’s largest producer, are ramping up exports to take advantage of a tumble in the exchange rate that has swelled their profit margins.Matthew Sherwood/The Globe and Mail

The world has never been so awash in sugar.

Just as cane harvests expand in India and Thailand, farmers in Brazil, the world's largest producer, are ramping up exports to take advantage of a tumble in the exchange rate that has swelled their profit margins. And crops that were hurt by drought last year have been revived by rain. Global output is set to exceed demand for a fifth consecutive year, leaving the biggest stockpiles on record, the International Sugar Organization said.

All of that sugar signals global prices, already down 50 per cent in three years, are poised to fall further, cutting costs for buyers such as Krispy Kreme Donuts Inc. and Mondelez International Inc., the maker of Cadbury chocolates and Oreos. New York sugar futures probably will slide 5.4 per cent by July to 12.02 cents (U.S.) a pound, the lowest since January, 2009, a Bloomberg survey of nine analysts showed.

"The fundamentals are absolutely bearish," said Donald Selkin, who helps manage about $3-billion of assets as chief market strategist at National Securities Corp. in New York. "Supplies are very extensive. The good growing season and the weak currency in Brazil are also making their exports more attractive."

Raw sugar for May delivery has tumbled 12 per cent this year to 12.71 cents on ICE Futures U.S. in New York, among the biggest declines of the 22 raw materials tracked by the Bloomberg Commodity Index, which fell 7.2 per cent. The MSCI All-Country World Index of equities rose 1.2 per cent, while the Bloomberg Dollar Spot Index climbed 7.4 per cent.

Global production in the year ending Sept. 30 will exceed demand by 620,000 metric tons, leaving record stockpiles of 79.89 million tons, or almost enough to supply the world's top seven consuming countries, data from the London-based sugar organization show. India, the second-largest producer, will have the biggest harvest in three years at 26 million tons, a Bloomberg survey showed. A Thai industry group estimated cane output rose 6.1 per cent this season.

In Brazil, which supplies one-fifth of the world's sugar, the incentive to sell more overseas has increased in the past few months, as budget deficits and a stalled economy sent the real plunging to the lowest in almost 11 years against the dollar. In the week ended March 11, domestic cargoes waiting to be shipped jumped 33 per cent from a week earlier, according to Recife, Brazil-based Williams Servicos Maritimos Ltda.

"With the Brazilian real down, it's hard to put a floor on prices," said Claudiu Covrig, senior agricultural analyst for sugar researcher Kingsman SA in Lausanne, Switzerland.

Food makers may not see much benefit in the United States, where the government limits sugar imports. Domestic futures, which trade at a premium to the world price, are up 9.6 per cent from a year ago. Mondelez raised prices to cover higher costs for cocoa, milk and sugar.

The trend for commodities is down, including a plunge in crude oil that has increased the risk of deflation from Japan to China to the European Union. With rising agricultural output, global food costs tracked by the United Nations are the lowest in four years, including a sugar index that last month was the lowest since 2009.

Cheaper sugar already is helping to reduce commodity costs by $3-million in the next fiscal year at Winston-Salem, N.C.-based Krispy Kreme, vice-president G. Price Cooper said on a March 11 conference call. The 1,000-store chain specializes in doughnuts glazed under a waterfall of mostly sugar and milk.