Sugar looking up again?

Sugar in New York rose to the highest price since March on signs that processors in Brazil, the world's largest grower, are churning out more ethanol and less sweetener.

Mills in the center-south region, where 85 percent of Brazil's sugar cane is grown, cut sweetener output by 8.7 percent from last year to 7.34 million metric tons, the Center South Sugar and Ethanol Industry Association, known as Unica, said yesterday in a statement. Ethanol output rose 11 percent to 5.56 billion liters (1.5 billion gallons), the group said.

``There are those who perceive the Unica numbers as constructive and that's why the market is up,'' said Jeff Bauml, managing director of BNP Paribas Commodity Futures Inc. in New York.

Sugar for October delivery rose 0.17 cent, or 1.8 percent, to 9.87 cents a pound on the New York Board of Trade. The price earlier reached 10.22 cents, the highest for a most-active contract since March 28. Sugar has jumped 16 percent from a 23-month low of 8.52 cents on June 5.

Crude oil reached $74 a barrel in New York today, the highest since August 2006. Rising energy prices will boost the appeal of ethanol as an alternative fuel, said William Adams, chief energy and capital market strategist for LaSalle Futures Group in Chicago.

Sugar futures may rise to 10.5 cents next week, he said. The price may reach 11 cents to 12 cents during the next two months, said Thomas Hartmann, a broker at Altavest Worldwide Trading in Mission Viejo, California.

Sugar Surplus

Prices still are 40 percent lower than a year ago because of concern that Brazil will boost production. The country's sugar- cane output will rise to a record 528 million metric tons in the current harvest, up from 474.8 million tons last year, the Agriculture Ministry said May 31.

Unica said mills had processed 131.3 million tons of cane this year through July 1, up 4.4 percent from a year earlier.

The global sugar surplus may reach 9.2 million metric tons for the year ending Sept. 30, according to the London-based International Sugar Organization.

``We are still saddled with a pretty big supply,'' Hartmann said.