The price of sugar is up +86% so far this year and has reached a 28-year high.

But this isn’t the end of a bull market for the commodity, it’s only the beginning.

Two separate forces on opposite sides of the planet are at play. Monsoon season in India typically brings about three-quarters of the country’s annual rainfall. But June, the first month of the season, was the driest it had been in more than 80 years.

Meanwhile, sugar-rich areas of Brazil saw four times more rainfall than average, making sugar cane too wet to mill. Also, Brazil has been turning huge quantities of its sugar into ethanol. According to the USDA, 42.5% of Brazil’s sugar crop was used to make ethanol in 2008, up from 40.4% in 2007.

Estimates suggest this could combine to the point where demand outpaces supply by more than five million metric tons. That’s 13.3% of worldwide exports. It is this expectation of a shortage that has pushed prices up.

To add fuel to the fires, there’s little reason to be optimistic about a rebound in sugar supplies in the near-term.

#-ad_banner-#The price increase already seen in the market will cause more farmers to plant sugar, but that harvest is pretty far off. Sugar cane typically takes about 12 months to reach maturity, although that time varies around the world. In some places, it takes as long as two years.

So even if farmers plant sugar today, it will be at least six months before they can harvest any of it. Once the labor-intensive harvest is completed, the sugar still must be extracted from the plant, processed, packaged and shipped, all of which takes time.

Sugar is surprisingly easy to buy. Commodities, once difficult and expensive markets to participate in, can now be accessed by individual investors using exchange-traded funds.

The PowerShares DB Agriculture Fund (NYSE: DBA) holds about 20% sugar and the iPath Dow Jones-UBS Sugar Subindex Total Return ETN (NYSE: SGG) is a pure play.

Sugar Shortages Have Happened Before
Like any other commodity, when sugar supply and demand gets out of whack, prices rise. Even the prospect of shortages can lead to price increases. Many large sugar consumers may stockpile sugar to protect against higher prices, and those large purchases constrict supply, which further pushes up prices. Shortages — or perceived ones — may even lead to households stocking up, emptying store shelves across the world.

That’s what happened in 1974 and 1980. The 1974 shortage saw prices more than three times higher than it is today — more than 60 cents a pound. In 1980, sugar took off again to hit 45 cents a pound.

Keep in mind, however, that farmers around the world are going to be adding their sugar to the markets as soon as they can. This is likely going to be sometime early next year, but it could be sooner. Whenever it happens, the price could drop, fast.