Sweet Trade Is Really an Energy Spinoff

The price of sugar was flirting with 25-year highs Tuesday, and it's not because of surging demand from sweet-toothed consumers. Instead, it's because Brazil signaled it would divert more of its sugar production to make ethanol, an alternative to gasoline to power cars.

In recent action, raw sugar for March delivery was up 0.65 cents, or 3.75%, to 18 cents a pound on the New York Board of Trade. On Monday, the contract briefly spiked to 18.75 cents, a level not seen since 1981. Tuesday's gains took place even as crude oil was losing 40 cents to $67.70 per barrel.

As oil prices surged last year, sugar soared 92% thanks largely to Brazil's converting more and more of its production to ethanol to both reduce its dependence on oil and foster its cane industry. ...