Thursday, April 3, 2008

Coming: Increasing Correlation Between Hershey Bars And Crude?

From Dow Jones via Cattle Network who headlined the story:

"Rising Ethanol Demand Spurs Oil, Sugar Mkt Link - Czarnikow"
The crude oil and sugar markets will become increasingly correlated as demand for sugar-based ethanol rises, sugar analyst Czarnikow said Wednesday. "Demand for ethanol is growing rapidly in response to new technology, a desire to reduce carbon emissions and high energy prices," said the report.

If the U.S., the world's largest ethanol consumer, decide to remove their current import duty on the biofuel, 2008-09 could see significant growth of ethanol exports from Brazil. In conjunction with this, high oil prices are also driving up demand for alternative fuels such as ethanol. As the world's leading sugar grower and producer of ethanol, Brazil currently uses around 54% of its sugar crop to make the biofuel