Forexpros – Sugar futures advanced on Thursday, rebounding a seven-day low as the previous day’s steep decline created bargain buying opportunities for investors amid hopes for a positive outcome at a critical European Union summit.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2334 a pound during European afternoon trade, jumping 1%.
It earlier rose by as much as 1.4% to trade at a daily high of USD0.2345 a pound. Prices fell to a seven-day low of USD0.2310 a pound on Wednesday.
Sugar prices regained strength after the European Central Bank cut its benchmark interest rate by 0.25% to a record low 1.0% earlier in the day, in a bid to bolster faltering growth in the region.
Investors will be looking for any hints the ECB will boost its bond-buying program to help stabilize euro zone bond markets, when central bank president Mario Draghi speaks at a press conference later in the day.
Also Thursday, European leaders were to begin a two-day summit in Brussels to discuss proposed changes to EU treaties which would allow for greater fiscal integration and stricter enforcement of budgetary discipline in the single currency bloc.
Weakness in the U.S. dollar also lent support. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.15% to trade at 78.75.
A weaker greenback boosts the appeal of dollar-denominated commodities and makes raw materials more attractive as an alternative investment.
Sugar prices tumbled the most in 11 weeks on Wednesday, dropping nearly 4.7% as expectations for a breakthrough at a critical European Union summit were dampened, after a senior German official expressed pessimism over the outcome of the meetings.
Meanwhile, sugar traders looked forward to the release of a slew of Chinese economic data on Friday, including closely-watched inflation figures for November.
The data was likely to show further signs of cooling in the world’s second biggest economy, giving Beijing more room to introduce further monetary easing measures.
China is the world’s largest sugar consumer. The country imported 1.6 million tons of the sweetener in the first ten months of 2011.
Elsewhere on the ICE Futures Exchange, cotton futures for March delivery eased up 0.1% to trade at USD0.9239 a pound, while Arabica coffee for March delivery added 0.4% to trade at USD2.3047 a pound.
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