Sugar futures jumped higher Wednesday, erasing Tuesday's losses as the contract consolidates into a new higher trading range.
Raw sugar futures for March rose 1.7% to 14.67 cents a pound on the ICE Futures U.S. exchange.
The contract has seen a meteoric rise over the last two months as the world enters the first year in six in which demand for the sweetener is expected to outstrip production. That's had traders placing bullish bets as the world begins to unwind from a glut of sugar that has been an overhang in the market. Since Aug. 24, when the most actively traded contract fell to a seven-year low, raw sugar futures have risen 41%.
In Brazil, the largest sugar-producing region, rains and a renewed focus on ethanol production over sugar production from cane are supporting the market.