Forexpros – Sugar futures edged lower in thin year-end trade on Thursday, as prices came under pressure from a broadly stronger U.S. dollar and amid the view that global supplies are ample.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2311 a pound during European afternoon trade, shedding 0.38%.
It earlier fell by as much as 0.6% to trade at a daily low of USD0.2287 a pound.
Trading volumes were expected to remain light ahead of the New Year’s holiday weekend, as many traders have closed books before the end of the year, reducing liquidity in the market and increasing the volatility.
Sugar prices have been under pressure in recent months, losing nearly 11% since the beginning of November, as increasing competition for U.S. exports and ample global supplies have been dominating sentiment.
The sweetener has plunged nearly 23% this year, putting it on track to be the third worst performing commodity in 2011. Sugar prices have plummeted nearly 36% since hitting a 30-year high of USD0.3594 a pound in early February.
Sugar prices came under pressure after Russia’s Institute for Agricultural Market Studies said earlier that sugar output in the country could reach 5.1 million metric tons in the year through July, following a record beet harvest.
Meanwhile, Russian sugar output from domestically grown beets rose 63% to 4.4 million tons as of December 19 from a year earlier, according to the country’s Sugar Producers’ Union.
Commodity traders continued to eye developments surrounding the euro zone’s sovereign debt crisis after Italy’s Treasury sold EUR7 billion of long-term debt maturing between 2014 and 2022, below the maximum target of EUR8.5 billion.
Following the auction, the yield on Italy’s 10-year bonds traded at 7.1%, above the critical 7% threshold widely seen as unsustainable in the long-term.
The news prompted investors to shun riskier assets, such as stocks and commodities and flock to traditional safe haven assets like the U.S. dollar. The euro dropped to a 15-month low against the greenback and to a ten-year trough against the yen.
Elsewhere on the ICE Futures Exchange, cotton futures for March delivery climbed 0.63% to trade at USD0.9125 a pound, while Arabica coffee for March delivery fell 0.61% to trade at USD2.2553 a pound.
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