London white sugar futures closed lower on speculative selling and spread activity on Tuesday as the trade digested news that Iraq is seeking 200,000 tonnes of physical sugar, traders said.Front-month October settled down $1.6 at $282.5 per tonne in volume of 1,878 lots, having moved from $282.3 to $284.6.
December concluded down $1.5 at $275 per tonne in volume of 272 lots, after trading from $274.8 and $276.4.
"We have seen spec selling and October-December spread trades. Trade is short covering against fund selling," one senior trader said.
Traders digested news that Iraq has invited bids to buy 200,000 tonnes of sugar at $340 a tonne, but there was no immediate impact in the futures market.
Traders said the $340-a-tonne price sought by the Iraqis was too low and unrealistic.
Iraq has invited bids to buy 200,000 tonnes of sugar at $340 a tonne, Iraqi officials and traders told Reuters on Tuesday.
The tender, which closed last week, amounts to more than a quarter of the 750,000 tonnes Iraq needs to import every year.
COCOA HOLDS STEADY:
London cocoa held steady on Tuesday, coming off an earlier 13-month continuation low, with dealers citing speculative selling interest as well as trade and industry buyers.
Liffe's December contract closed one pound higher at 804 pounds a tonne, in volume of 8,708 lots. Total turnover was 17,943 lots. It had earlier touched 799 pounds a tonne, the lowest level for a second-month contract since July 2004.
Dealers attributed the downward shift to short selling and spread trading.
"There's still some genuine selling around with speculative liquidation into both markets (New York and London)," a dealer said, adding that players were rolling their short positions on September into December.
"Trade and industry buying was offsetting the selling pressure," he added.
COFFEE LITTLE CHANGED:
London coffee finished little changed on Tuesday after trade buying and a steadier New York market helped lift prices off a four-month low touched earlier, traders said.
Liffe's second-month November hit a low of $1,040 a tonne - a level not seen since April 18. It made a session high of $1,064 and concluded at $1,061, down $4.
Total volume was 13,039 lots with front-month September and November moving 4,388 and 5,400 lots respectively, mainly on spread trade.
Benchmark robusta dropped 4.7 percent yesterday while New York-traded arabica plummeted 8.3 percent to a nine-month low after large investors got out of long positions built up in previous months.
Liquidation was triggered by a higher-than-expected production forecast for the 2005/06 agricultural year in top coffee grower Brazil.