Forexpros – Sugar futures pared losses on Wednesday, bouncing off the daily low after China’s central bank announced that it will lower reserve requirement ratios for lenders, while ongoing concerns over ample global supplies continued to weigh.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2343 pound during European afternoon trade, dropping 0.5%.
It earlier fell by as much as 1.35% to trade at a daily low of USD0.2316 a pound.
Sugar prices came off their lows after the People’s Bank of China cut the reserve requirement ratio for its commercial lenders by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
The cut in reserve ratios was the first since December 2008 and helped fuel speculation that China’s monetary policy has swung into easing mode.
China, the world’s largest sugar consumer, has imported 1.6 million tons of sugar in the first 11 months of 2011.
However prices remained under pressure as concerns over the sovereign debt crisis in the euro zone lingered after a meeting of euro zone finance ministers on Tuesday failed to reassure markets.
Sentiment was also weighed after ratings agency Standard & Poor’s downgraded its ratings on 15 major global lenders on Tuesday, underlining concerns over the health of the global banking system.
Major agribusiness financial service provider Rabobank lost its coveted triple-A rating, with S&P downgrading the lender by two notches to AA.
Meanwhile, Wall Street investment bank Morgan Stanley said in a report Tuesday that sugar prices have limited potential for gains in 2012, citing a higher-than-expected global surplus of the sweetener.
The bank expected a global sugar supply surplus of 6.5 million tonnes in 2012, boosted by strong output in Brazil and Russia and as a disruption to Thai supplies “proved less dismal than some had suggested”.
Brazil is the world’s largest sugar producer and exporter, while Thailand is the world’s second largest shipper of the sweetener.
Elsewhere on the ICE Futures Exchange, cotton futures for March delivery shed 0.35% to trade at USD0.9242 a pound, while Arabica coffee for March delivery eased up 0.15% to trade at USD2.2793 a pound.
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