Standard Chartered forecast a rebound in sugar prices of nearly 20% even as Commerzbank sounded a downbeat note on values, warning of the pressure on values from bumper Chinese output.
Standard Chartered, while lowering its forecasts for New York raw sugar prices, kept them above the futures curve, cautioning that investors were underestimating production risks.
Although concerns over output from Brazil had eased with drier weather, speeding the cane harvest, weather could still wipe out much of the world surplus production forecast for 2012-13.
The bank noted that Kingsman, the influential Swiss-based sugar consultancy, had already lowered by 6.68m tonnes, from 8.1m tonnes, its estimate for the output surplus.
"The caveat in that estimate is that there is a weather-dependent swing factor of around 6.5m tonnes on account of possible shortfalls in production" in some major producing countries, StanChart analyst Abah Ofon said.
"This is important, as global sugar estimates tend to be notoriously volatile."
The sugar market "still needs to price for risk as output remains uncertain in a number of key trading countries, including China, India and Thailand", Mr Ofon said, noting a "looming supply uncertainty".
The group's revised forecasts, of an average of New York raw sugar price of 22 cents a pound in 2012 and 25 cents a pound next year imply price gains of 8% and 19% from current futures values.
'Further pressure on prices'
However, Commerzbank cautioned that the forecast supply surplus "greatly limits upside potential for sugar prices", noting in particular the improved expectations for China's production.
Chinese output is expected to have returned above 12m tonnes for the 2011-12 season, ending this month, and reach 13.6m tonnes in 2012-13, according to the International Sugar Organization, with some estimates at 13.7m tonnes.
This would limit the need for the imports which have marked the last two years, seeing purchases far exceed a duty-free quota of 1.94m tonnes.
"The local sugar price has fallen sharply, with the result that the interests of producers are likely to be given greater consideration again," Commerzbank said.
Indeed, China is reportedly to start soon a 500,000-tonne state stockpiling programme to stabilise the domestic market.
"High imports which put further pressure on prices are not what is wanted at the moment."
Furthermore, even a prop from fears over Indian output were waning.
"One of the few supporting factors in recent times was the poor monsoon season in India, yet even here rainfall appears to be improving the situation," said the bank, which foresees sugar prices averaging 23 cents a pound next year.
New York's October raw sugar lot closed 2.5% lower at 18.96 cents a pound, with the better-traded March contract down 2.3% at 19.69 cents a pound.