World sugar prices climbed on Monday amid concerns that the ongoing conflict between the United States and Israel with Iran could disrupt global energy supplies and influence production decisions in Brazil, the world’s largest sugar producer, Reuters reported.
Market participants said higher energy prices could encourage Brazilian sugar mills to divert more sugarcane toward ethanol production instead of sugar. Ethanol is a biofuel made from sugarcane. If mills allocate more cane to produce fuel, less will be available for sugar manufacturing, potentially reducing overall sugar output.
At 1045 GMT, raw sugar futures on the ICE exchange were up 2.5 per cent at 14.23 cents per lb. White sugar futures also increased, rising 3.2 per cent to $420.50 per metric tonne.
Industry experts said the rise in oil prices typically supports ethanol prices, which can make fuel production more attractive for mills. One veteran sugar consultant noted that higher oil prices may lead to lower sugar production in Brazil, depending on future domestic fuel price adjustments.
