Wanna make a quick half-cent? Then take a look at October sugar.

Flagging production out of India has worried traders so much this year they've bid prices up more than 30%. India, in fact, looks likely to end up importing as much as one million tons of the white stuff to the great benefit of Brazilian producers.

The fly in the sugar bowl is ethanol. Sugar cane is the feedstock for Brazil's ethanol industry. As long as oil prices pressure gasoline higher, cane that would otherwise be destined for export refining will likely be diverted into fuel production.

That fly starts buzzing when prices get too high for end-users. We're already seeing some balkiness as consumers react to recent price hikes, in fact.

That's not stopping traders. Sugar prices broke to the upside this week as rumors of a large trader standing for delivery in the expiring July contract roiled the ring. Short-covering and fresh buying took the October contract up a penny on Tuesday alone. Wednesday's market followed through to new high ground.

NYBOT/ICE Sugar #11 (Oct. '09)

Given the dynamics of the breakout from sugar's recent congestion area, there's probably room for a run to the 18-cent level in the October contract. Today, the October contract opened at 17.03 cents, working steadily upward to reach 17.60 in mid-morning trade. At last look, prices had pulled back to the 17.50 level

A sugar contract, at 112,000 pounds, yields $1,120 in equity change for each penny's worth of price movement. At this point, traders who aren't already long have to ask themselves if a half-cent ($560) is sufficient reward for the inherent risk in the trade.

After all, there are alternatives, such as corn syrups, to sugar which give consumers an "out." Demand for sugar is elastic, at least outside of India. A dollar rebound, too, is an overhanging threat for a spec-driven market like sugar.  

For securities investors, an 18-cent objective for October sugar translates to the $55.60 level in the iPath Dow Jones-UBS Sugar Subindex ETN (NYSE Arca: SGG).