Sugar, oil prices decouple as biofuel stocks grow

LONDON (Reuters) – Links between crude oil and sugar prices have broken down due to high stocks of cane-derived biofuel, and may not be restored any time soon, analysts and traders said on Wednesday.

Oil prices are trading just off record highs, boosted by geopolitical turmoil and supply worries, while raw sugar prices have sunk to their lowest since January.

Analysts said worries over sustained high oil prices had driven up interest in alternative fuels such as ethanol, the most widely used biofuel which is derived from biomass such as sugar cane and powers flex-fuel cars.

In recent months, sugar price peaks have often coincided with oil price spikes.

Reuters