A huge Iraqi offer to buy white sugar risked failing to lure serious bids as it was priced too low, and a lack of offtake from a couple of Asian tenders disappointed the market this week, traders said on Wednesday.
They said the Iraqi invitation for bids to buy 200,000 tonnes of refined sugar more than a quarter of Iraq's annual import needs at an asking price of $340 a tonne might only trigger bids from fly-by-night operators.
"A price of $340 per tonne CFFO (Cost and Freight and Free Out) is too low to attract serious offers, but may bring out, like slugs after rain, a posse of briefcase traders," one European broker said.
Another broker said, "Iraq was asking for offers at a low price of $340 per tonne which might mean that if they did manage to strike a deal at that level, the sugar is unlikely to turn up."
He added, "In any case, offers received are thought to have been far higher making a purchase less than likely, especially if the sugar is needed for Ramazan."
The white sugar futures market ran into some speculative selling this week amid disappointment over the outcome of Bangladeshi and Pakistani tenders over the weekend interpreted as negative signals for the physical market.
The Bangladeshi tender to buy 50,000 tonnes of whites for shipment in September was scrapped, presumably because bids were too high, and only half of a Pakistani tender for 50,000 tonnes was awarded, to the Al Khaleej refinery in Dubai.
Some European sugar market sources believe stocks are low at the Dubai refinery after a successful string of sales to Asia and the Middle East, but refinery chairman Jamal Al Ghurair declined to comment on the level of his inventory.
Some European market operators believed negotiations might be continuing to satisfy the Bangladeshi demand. Some futures traders welcomed the latest speculative-led selling after a rally last month to a seven-year front-month continuation peak of $324 per tonne, saying the dip in futures prices this month may help stimulate fresh physical demand.
London front-month October white sugar futures were up $1.00 at $283.50 per tonne in volume of 429 lots.
Traders were not aware of any imminent new tenders, apart from ongoing Pakistani tenders, ahead of Ramazan, which begins in October, adding that much Ramazan demand is booked several months in advance.