This report evaluates the U.S. and world sugar markets for 2006-2016 using the Global Sugar Policy Simulation Model. This analysis is based on assumptions about general economic conditions, agricultural policies, population growth, weather conditions, and technological changes. Both the U.S. and world sugar economies are predicted to remain profitable over the next ten years mainly because higher world oil prices have increased the conversion of sugar into ethanol by Brazil, while other exporting countries have increased their production in response to those higher prices. Brazil is the largest exporter of sugar, and it is expected that the rate of increase in Brazilian sugar exports may be reduced due to high oil prices. World demand for sugar is expected to grow at a similar rate to world supply, resulting in Carribean sugar prices remaining near the 13.0 -15.0 cents /lb range throughout the forecast period. The U.S. wholesale price of sugar is projected to increase slightly from 29.5 cents/lb in 2006 to 29.8 cents/lb in 2016, if Brazil continues to convert sugar into ethanol. It is projected that Mexico will be able to export 416 thousand metric tons of sugar to the United States by 2016. World trade volumes of sugar are expected to increase throughout the forecast period.