Forexpros – Sugar futures advanced on Thursday, as the previous day’s drop to a six-month low created bargain buying opportunities for investors, however prices were expected to remain under pressure on 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, jumping 1.2%.
It earlier rose by as much as 1.35% to trade at a daily high of USD0.2314 a pound. Prices fell to USD0.2268 a pound on Wednesday, the lowest since June 2.
Sugar prices regained strength after Spain’s Treasury sold EUR6 billion of medium-and-long-term bonds earlier in the day, far surpassing a target of EUR3.5 billion.
The country sold EUR2.5 billion of five-year bonds at an average yield of 4.02%, down sharply from 5.27% at a similar auction last month. Spain also auction EUR1.4 billion in ten-year bonds at a yield of 5.54%, compared to 6.97% at a November bond sale, a level widely viewed as unsustainable.
The well-received bond auction helped ease concerns over the health of the euro zone’s fourth largest economy.
Market sentiment has been hard hit in recent days by the view that last week’s European Union summit did not result in concrete plans to tackle the debt crisis in the region.
Sugar prices tumbled nearly 2.75% on Wednesday, after Italy was forced to pay euro-era high yields at an auction of five-year bonds and as concerns over a possible mass downgrade in the euro zone lingered.
However, the sharp decline, coupled with some mild weakness in the U.S. dollar, triggered some bargain buying from traders. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.35% to trade at 80.96.
Despite the gain, prices were expected to remain under pressure in the near-term amid increased supplies from top producers Brazil and India.
Global financial service provider Barclays said in a report earlier that “a global surplus as well as India’s recent decision to export 1 million tonnes, with the potential for additional exports” was likely to cap any significant move to the upside.
Elsewhere on the ICE Futures Exchange, cotton futures for March delivery climbed 0.7% to trade at USD0.8574 a pound, while Arabica coffee for March delivery rose 0.68% to trade at USD2.1893 a pound.
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