Sugar on uncharted course, link to funds, energy

Sugar prices, the highest for nearly five years, are entering uncharted territory as investment funds show a record interest in the commodity which traders see as increasingly tied to energy markets.

After raw sugar futures set a fresh 4-1/2 year high of 10.35 cents per lb last week, some traders say they have the potential to break through the 11 cents per lb barrier this year.

..Traders say the latest surge in oil prices has underscored the strong speculative interest in sugar as increased demand for biofuels could divert more Brazilian cane towards ethanol production instead of sugar, reducing sugar availability.

Sign On San Diego