The chances of sugar posting fresh highs are dimming as major producing countries gear up output to exploit the strong market, Commonwealth Bank of Australia has said.

Sugar's bull run, which has driven it to all-time highs in London and to a 28-year top in New York, is "achieving what high prices should" in curbing demand.

"Consumption is being rationed," CBA analyst Luke Matthews said.

"Importers are becoming savvy regarding the timing and composition of their purchases."

'Back to normal'

Meanwhile, growers were raising production for 2010-11, with Brazilian crushers getting a headstart from the 50m tonnes of cane abandoned because of heavy rain – the country's main growing region had its wettest September for 26 years.

Raw sugar output in Australia, a mid-ranking producer, would rise by 300,000 tonnes to 4.6m tonnes.

Mr Matthews said he was "not as convinced [he was] were a month ago" that sugar could post new highs.

"A recovery in global production should result in prices moving swiftly back towards more normal levels over the course of 2010-11," he added, noting sugar's average price since 1993 of less than $0.10 a pound.

India's 'vagaries' 

India, the world's biggest sugar consumer and second largest producer, looked the country most likely to send prices rocketing again, given the "vagaries" of its sugar market.

Farmers faced "every changing cane pricing mechanisms", making their response to price rises difficult to judge.

Earlier this week Indian cane growers called off a protest after mills offered to raise prices above levels mandated by the government.

Even official Indian estimates showed a broad range, with the Department of Food and Public Distribution pegging 2009-10 output at 18m tonnes, 2m tonnes higher than the forecast by the Ministry of Agriculture.

"Looking further into 2010-11 the Indian picture is even more uncertain," Mr Matthews said, highlighting production forecasts ranging from 19m-20m tonnes to 26m tonnes.