SOFTS-Raw sugar surges to two-month peak, arabicas steady
* Big raw sugar delivery seen in expiry
* Brazil's Petrobras raises gasoline and diesel prices (Adds trade comment, updates prices)
By David Brough
LONDON, Sept 30 (Reuters) - ICE raw sugar futures rallied more than 4 percent to a two-month high on Wednesday after Brazil's oil firm Petrobras said it would raise fuel prices, potentially boosting demand for cane-based ethanol.
Petrobras is raising gasoline prices by 6 percent and diesel by 4 percent at refineries in Brazil. This may encourage drivers using flex-fuel vehicles to use more cane-based ethanol biofuel, thereby reducing the amount of sugar made from cane.
"The miller (in Brazil) will produce more ethanol and less sugar," a senior Western analyst said.
Phil Pia, broker for Societe Generale in New York, said: "Petrobras raised the price of gasoline, anhydrous (ethanol) prices are already higher. That's supportive of sugar."
Kona Haque, head of research at ED&F Man, said the sugar market had not been expecting the announcement.
"It was a surprise," Haque said. "This is a bit of bullish news. Ethanol prices have moved up, and this will affect sugar." Continuación...