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Green is where the article talks about supply factors

Yellow is about demand

Purple is where the article talks about government control of the market

Red is the argument that the free market will solve the problems

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Consumers go sour on the market's sugarrushA combination of bad harvests and speculation has sent the price of cane soaring - and

provoked protests and violence in Asia

A worker cuts sugar cane in South America, where environmental incentives have prompted

it to be used in producing ethanol fuel. Photograph: Jamil Bittar/ReutersWill that be one lump or two? Or, perhaps, none. A sugar rush is gripping the globalcommodities market. The price of the world's favourite sweetener shot to its highest level for 29 years this week in a worrying surge that has sparked political strife and street protests in

parts of southern and south-east Asia.

A militant women's group staged a breakfast demonstration outside government offices in thePhilippines on Tuesday, demanding intervention to bring down sugar prices. Protesters

banged utensils at a rally in the Indian state of Bihar, and in Pakistan the authorities haverationed sugar, prompting violent confrontations as anger spills over at the perceived greed of

producers.

Raw sugar traded on New York's Intercontinental Exchange surged in price by 128% lastyear, while white sugar on London's Life trading floor jumped by 123%. In the US markets

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on Monday, the price of a pound of raw sugar touched 30 cents for the first time since 1981,far above the range of 12 to 15 cents prevalent between 2007 and early 2009.

Toiling in a generally low-profile corner of the commodity markets, sugar traders aresuddenly in the spotlight. But the immediate blame for this spike in prices lies in a factor indisputably beyond human control the weather. A late monsoon disrupted sugar harvests inIndia, while too much rain disrupted supplies in the world's biggest sugarcane-growingnation, Brazil.

"It was the wettest harvest season here for decades," says Andy Duff, a commodities analystat Rabobank in So Paulo. "There was less cane harvested than previously anticipated and thequality was lower than anticipated."

For the second consecutive year, global supply has fallen short of demand and many nationswith sugar stockpiles are running short. The global financial crisis has not helped, making itharder for growers to finance outlay on fertiliser and equipment. In South America,environmental incentives have seen some sugarcane diverted into production of ethanol fuel.

Meanwhile, demand is robust fuelled by population growth and rising incomes in emergingmarkets such as China. In poorer nations, a good chunk of every extra dollar earned isdirected at food.

Population drift to the towns also adds to the appetite for sugar, according to Duff:"Increasing urbanisation drives changes in diet. It's associated with more consumption of sugary snacks and processed food."

Analysts at Commerzbank describe the sugar situation as "the perfect storm". In a researchnote, the German bank suggests the price still has "immense upside potential" and could evenreach 40 cents per pound a level exceeded only twice, during sugar crises in 1975 and 1980.

Tom Mikulski, a market strategist at commodities dealer Lind-Waldock in Chicago, says:"Unless we have a massive jump in production, I don't really see this market breaking anytime soon."For consumers, the link between commodity prices and supermarket costs is complicated.Sugar, more than most traded products, occupies a financial niche in which Wall Street andthe high street are worlds apart. To protect European sugar growers, the European Unionroutinely keeps sugar prices artificially high so shoppers in Britain and on the continent areused to paying a premium anyway.

The US has a similarly protectionist setup, limiting imports to safeguard its own farmers. Butsnack manufacturers such as Mars, Hershey and Krispy Kreme have been urging the Obamaadministration to raise import quotas, warning that a shortage of sugar could lead to joblosses.

But in developing countries, the price of sugar has historically been lower and the recentspike in cost has been a shock. A columnist in the Manila Standard Today newspaper complained this week that a kilo of white sugar in public markets in the Philippines had

jumped in cost from 40 pesos to between 50 and 60 pesos since Christmas. And a kilo of sugar on the black market in Pakistan, where sugar consumption is among the highest per

person in the world, can reportedly fetch more than a day's pay.

"If you look at the impact, sugar comprises a greater share of the food basket in developingmarkets," says Sudakshina Unnikrishnan, an expert in agricultural commodities at BarclaysCapital. "We don't really expect these problems to be a precedent set for developed countries,which have a kind of artificial system by which prices are set."

Since sugar inflation began to take hold in mid-2009, the news from growers has beenconsistently bad. In addition to poor harvests in India and Brazil, smaller producers such as

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Mexico, Thailand and Vietnam have come up short. "It's not that demand has grownextraordinarily this year it's been growing in line with long-term trends," saysUnnikrishnan. "The problem has been underperformance on the production side and the bigsurprise is that, in spite of price rises, demand has held up."

In an unusual move from Brussels this week, farm commissioner Mariann Fischer Boelannounced that the European Union intends to export 500,000 tonnes of sugar to the globalmarkets above and beyond its usual quota to try to ease a squeeze in supply. This faced swiftcondemnation from other sugar producing nations, which complain that European farmers areunfairly subsidised. Brazil's sugarcane industry association, Unica, said it was a short-sighted

breach of international trade rules.

Sensing an opportunity, speculators have shown little mercy. Hedge funds have piled intosugar, aggravating lurches in the price. Blaming speculators, however, would be a cheap shot,according Jonathan Kingsman, founder of the specialist sugar broker Kingsman, based inSwitzerland.

"The speculators are involved and they'll always be involved, but there are fairly solid

fundamentals to this market," says Kingsman. "There's not enough sugar to go around."A calming in prices, he believes, will ultimately happen once growers react to the prospect of higher income and plant more crops: "Price is the best possible fertiliser," he says.