London: Global sugar prices declined on Tuesday after US President Donald Trump said the conflict involving Iran could end soon, a development that pushed oil prices down by about 7 percent, Reuters reported.
Traders said the market is closely watching energy prices because they influence sugar production decisions in Brazil, the world’s largest sugar producer. Mills in Brazil can shift sugarcane between sugar and ethanol production depending on which offers better returns.
At 1356 GMT, raw sugar futures on the Intercontinental Exchange were down 2 percent at 14.29 cents per pound after earlier falling nearly 3 percent. White sugar futures also dropped 1.4 percent to $414.90 per tonne.
Market participants said the outlook for oil prices remains important for Brazil’s sugar sector. The country’s state-run oil company Petrobras, which supplies about 80 percent of the gasoline in Brazil, has not yet raised domestic fuel prices. However, traders said the longer the conflict continues, the greater the chance that gasoline prices could eventually increase.
In Brazil, ethanol prices are closely linked to domestic gasoline prices, meaning any change in fuel prices could influence how much sugarcane mills allocate to ethanol production instead of sugar.
