Forexpros – Sugar futures advanced in thin year-end trade conditions on Thursday, boosted by weakness in the U.S. dollar, however prices continued to trade close to last week’s five-month low amid concerns over ample global supplies.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2341 a pound during European afternoon trade, climbing 0.85%.
It earlier rose by as much as 1.05% to trade at a session high of USD0.2348 a pound. Prices fell to a five-month low of USD0.2263 a pound on December 15.
Sugar’s gains came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, declined 0.12% to trade at 80.25.
A weaker dollar boosts the appeal of U.S. commodities to overseas buyers and makes raw materials more attractive as an alternative investment.
Sugar futures also benefitted from two separate brokerage recommendations. U.K.-based lender Standard Chartered forecast sugar prices to rise to USD0.2800 a pound in May, citing “supply slippages” in top grower Brazil.
In a report published Wednesday, the bank said that this year’s 28% plunge in prices was likely to discourage cane planting in Brazil and India, the second largest grower and biggest consumer of the sweetener.
Separately, Australian investment bank Macquarie Group said prices may rise above USD0.2500 a pound from the third quarter of 2012 after bottoming out in the second quarter.
According to the bank, prices will remain under pressure in the first half of next year as exports from the European Union, Central America, India and Thailand increase.
The report added that Brazil may not be able to increase sugar output in the 2012-13 marketing season due to the low rate of cane replanting and potential dry weather.
Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
Sugar prices have been under pressure in recent weeks, losing nearly 10% since the beginning of November, as increasing competition for U.S. exports has been dominating sentiment.
Elsewhere, on the ICE Futures Exchange, cotton futures for March delivery rose 0.45% to trade at USD 0.8722 a pound, while coffee futures for March delivery added 0.7% to trade at USD2.2078 a pound.
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