Sugar prices have been on a roller coaster this year. During the middle of the year, rumors were rampant that supply was tight. Prices more than doubled.

Then rumors spread that there would be a surplus of sugar this year and prices had a sharp sell off. Now the latest guesstimate is that sugar demand will exceed supply in the marketing year ending September 30. As reported in Bloomberg/Businessweek, analysts for ABN Amro and VM Group forecast that demand will reach 165.3 million metric tons, more than 3 million tons more than supply.

Yes, you can expect to pay more for your cup of coffee. Supplies of prized Arabica beans are in short supply, driving prices to a 12-year high. Prices for December delivery jumped 3% to $1.852 per pound. Retail prices can be more than double that price.

J.M. Smucker (SJM), distributor of Dunkin Donuts, Millstone and Folgers, already raise prices by 9%. Kona Haque, commodities analyst for Macquarie, was quoted in the Financial Times, saying: "The coffee futures market had attracted speculative buying. It's completely dominated by funds right now."

Sugar is one of the most basic commodities. Countries throughout the world are wanting sugar. Supplies of sugar are reaching a 20-year low this year. The shortage may become especially acute in the third quarter.

Here some supply/demand statistics:

• India the biggest importer may need an extra 2.5 to 3 million tons to meet a 7 million ton deficit.
• China, the biggest consumer after India may have a deficit of 3.3 million tons.