Sugar prices soared above 21 cents a pound for the first time in six months on estimates that Pakistan may buy 500,000 tonnes of the sweetener, while neighbouring India downplayed hopes for its output.

Raw sugar for October delivery closed 4.1% higher at 21.45 cents a pound in New York, the best for a spot contract since early March. The jump took the rally in the sweetener since an early-May low above 60%.

The increase reflected in the main a continued scrambling for supplies by buyers who held-off purchases during the price spike early in the year in the hope of an easier market when Brazil's record 2010-11 cane crop came to be crushed.

"Buyers are finding the market is still fairly tight, the despite the large Brazilian production," a London trader told Agrimoney.com.

"I suspect the trend will be here until sugar lands in the shops, and we are certain over supplies."

Raws vs whites

However, the trader also flagged comments from a government spokesman that Pakistan may need 500,000 tonnes of sugar to meet growing demand at a time when its own cane crop has been devastated by floods.

Iskandar Khan, chairman of the Pakistan Sugar Mills Association, said that the country could save money by buying raw sugar, for processing itself, rather than the white sugar it typically turns too, and suggested the imports could be made by December.

With US markets closed on Monday for Labor Day, Tuesday also represented the first opportunity for traders to react to comments from India's farm minister, Sharad Pawar, that the country's sugar production may come in at 22m tonnes in 2010-11, an estimate well below consensus.

"With other analysts estimating production up to 25m tonnes or more, this seemed rather low," Nick Penney at Sucden Financial said.

Weather threat 

He also noted the spread of rises in sugar prices along the futures curve, with contracts up to May 2012 seeing rises of at least 3%.

Societe Generale warned on Monday that the outlook for future supplies of sugar was worsening with persistent dryness in Brazil's cane areas.

Meteorlogix, the forecaster, said on Tuesday that "if hot, dry weather continues, it could impact next year's crop".

White sugar for October closed 1.8% higher at $605.80 a tonne in London.