Raw sugar futures on ICE turned higher on Monday after hitting a two-month low, with the market finally finding some support after five consecutive daily declines.

SUGAR: March raw sugar was 0.5% up at 19.04 cents per lb by 1408 GMT after touching a two-month low of 18.92 cents.

Dealers said the recent slide in prices had been driven by fund selling against the backdrop of Brazil’s decision not to reinstate federal taxes on gasoline in a move that could encourage more use of cane to produce sugar rather than biofuel ethanol.

“That has rightly been taken as bearish for sugar, because it clearly implies that Lula’s government intends to rethink the fuel pricing policy of Brazil,” broker Marex said in a note.

“That could end up with a price for gasoline based on extraction costs, so it could generate a very low ethanol parity, which would drag sugar prices much lower.”

Dealers were also keeping a close watch on political unrest in Brazil after supporters of the country’s former president Jair Bolsonaro stormed the capital over the weekend.