The benchmark March raw sugar contract on the New York Board of Trade closed on Friday at 17.15 cents a lb, its highest level since 1981 based on the monthly closing charts for the market.

In London, the March white sugar contract climbed , or 4.7 percent, to close at 1.10 per tonne, just down from a new contract peak of 3.20, as white prices bounded to their highest level in nearly 10 years.

"We’re in uncharted waters," James Cordier, chief analyst for Liberty Trading Group, told Reuters. "I say we’re going to travel at least to 20 cents."

Alex Oliveira, the sugar analyst for brokerage house FIMAT USA Inc., quipped that 20 cents may be hit soon, given that the March contract blasted through 16 cents on Thursday and then 17 cents on Friday.

"It’s anybody’s guess. The only selling we’re seeing is (spec and fund) profit-taking," he said.

Even then, a surge in the price to 20 cents for sugar is still far from the 45 cents sugar hit in 1980 and the area above 60 cents it enjoyed during its mid-1970s heyday.

Judy Ganes, analyst for commodity firm J. Ganes Consulting, said the market could edge higher, but pointed out that "the most powerful (action) in a bull move is the ending."

"Most certainly, we’re overextended. I thought it was a stretch to get to 15 cents," she said.

Marius Sonnen of Sonnen and Co. said he feels sugar’s rally has been too sudden and sharp, and that "at this point, the market may take a little breather."

Some analysts feel the enormous rally on Friday was caused in part by producers junking their marketing strategy of selling just above the market.

Normally, exporters of sugar would have selling or buying programs in place to sell the sweetener once it hits certain price levels.

"I think some of the producers got rid of their hedges and raised it, which could be seen as bullish because they think this thing has a lot higher to go," one said.

Expectations that leading grower and exporter Brazil will churn out more ethanol from cane in the 2006/07 season, lower European and Thai output, and steady demand from countries like Pakistan, China and Russia have combined to provide the fundamental underpinning for the advance.

There are also investment funds, which have poured billions of dollars into the sweetener.

Indexes providing access for long-term investors to commodities had seen investments swell to around billion by the end of 2005, from around billion by the end of 2004 and only billion by end-2003, according to Goldman Sachs , which runs one of the biggest commodity indexes.

"The funds can drive this thing higher beyond what anybody is expecting. A lot of people will say sugar is overdone and the fundamentals have been blown out of all proportion, but you have to remember that it is the funds who will determine when it is time to get off the train. Until then, hang on," a dealer said.