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Even though a shortfall of supply in Brazil is the source of a new rally in the world sugar markets, shares of Brazilian producer Cosan are still on the rise. New estimates on Brazilian agricultural production indicate that the country's cane plantations could end up selling 3.2% less sugar this year thanks to a long summer drought.

This has pushed the price of refined sugar up 2.3%, extending a rally that has seen traders bid up the key commodity to its highest level since February. Even though it is likely now that major Brazilian sugar company Cosan (NYSE:CZZ) is going to miss its own production targets, the fundamentals could easily boost the company's bottom line.

While we sometimes think of sugar as a dietary vice of the developed world, the sweet tooth is actually global. India is the world's biggest sugar consumer -- and in fact part of the rally in the sugar markets has been attributed to the start of the fall Indian festival season. Going forward, Indian farmers may actually have a big enough harvest to start exporting sugar this year for the first time since 2007.

This may start digging into CZZ's competitive position over the next few months. But in the meantime, between sugar and the ethanol that is increasingly refined from it, it seems to be a great season for CZZ and its peers, companies like CPO in the United States.

Disclosure: No positions

Source: Sugar Surge Bullish for Cosan