Economy & Business - January 2006

The international sugar price hit its highest level for a generation on 20 January 2006: US$0.17 per pound. This followed cuts in forecasts for the amount of sugar Brazil will supply to world markets. The forecasts are being cut for two reasons: one is a drought which has affected cane production in the northeast of the country. The high international oil price is encouraging sugar producers to distil more of the stuff into alcohol to meet the booming demand for alcofuel in Brazil. About 80% of the ethanol Brazil produces, which could run to 16.6bn litres in the year to September 2006, is used to run cars in Brazil.