NEW YORK, Jan 21: Raw sugar prices surged to a 25-year high on Friday in one of the biggest gains in memory as professionals bet tight supplies and growing demand for cane to churn out ethanol would fan further gains.

In other US commodity trade, gold also charged to a new 25-year high, but settled lower as investors pocketed some profits. Cattle prices fell after Japan slammed the door on US beef imports on reawakened fears of mad cow disease.

The New York Board of Trade’s key March raw sugar contract climbed 1.03 cents, or 6.3 per cent, to finish at 17.15 cents a lb. It was the highest close since mid-1981 and the biggest one-day gain in at least 6-1/2 years.

It’s panic buying. Everybody piled in, James Cordier, chief analyst for Liberty Trading Group, told Reuters.

Sugar has taken off mainly in reaction to the rising use of cane, especially in top producer Brazil, to manufacture the bio fuel ethanol for motor vehicles hit by high fuel prices.

That has crimped supplies just when the Brazilian crop fell short of expectations and drought hit cane growth in Thailand, another crucial exporter.

Plus, Pakistan must import 800,000 tons of sugar, while China will be needing sugar shortly. Regular, sizable buyers from the Middle East also have upcoming requirements.

At the COMEX division of the New York Mercantile Exchange, gold for February delivery ended down $5.00 at $554.00 an ounce, after rallying to $568.50, which bested the previous peak of $565.50 hit on Tuesday.

Traders said gold’s fundamental picture would support aggressive commodity fund buying that has fueled a 6.76 per cent rally in 2006 as geopolitical tensions, high energy prices and economic uncertainty lured investors’ to safe-haven buys.

Gold futures shot up 2.66 per cent on Thursday after a report on Al Jazeera TV that Osama bin Laden warned that al Qaeda was preparing new attacks inside the United States.

Adding more geopolitical uncertainty was news that Iran, which could face UN sanctions over its atomic program, had started to transfer assets held in foreign accounts. This prompted some dealers to speculate that Iran could be in the market for gold, but there was no confirmation.

I think a lot more people are starting to view gold as a currency of sorts and realize that in this uncertain geopolitical environment, they are fleeing to something that has always been a historical safe haven, said Emanuel Balarie, senior market strategist with Wisdom Financial.

February live cattle futures at the Chicago Mercantile Exchange closed 0.350 cent at 95.775 cents per lb with higher cash markets helping to pare sharp losses posted at the open after Japan put another halt on US beef imports.

Japan, which lifted its ban just a month ago, reimposed it after finding in a meat shipment animal parts that could cause mad cow disease.—Reuters