SOFTS-ICE sugar falls to lowest in more than 2 years, cocoa firm
* Third consecutive world sugar surplus weighs
* Liffe cocoa December expires around par to March
* Index reweighting seen supporting arabica price
(New throughout, updates prices; adds trade comment, second byline/dateline)
NEW YORK/LONDON, Dec 12 (Reuters) - Raw sugar futures on ICE slipped to the lowest level in more than two years on Wednesday and cocoa jumped as the spot contract trading on Liffe expired, with dealers anticipating a small delivery.
Arabica coffee turned quietly lower in its second straight inside session, while robusta moved upward.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, was firm on expectations the U.S. Federal Reserve would announce a fresh round of bond buying to stimulate a fragile economic recovery.
Raw sugar eased to its lowest level since August 2010, with producers showing little sign of selling aggressively at current depressed levels and importers also sitting back after the recent slide.
"I can't see any rush on the importers side to purchase, as apart from Indonesia all the other big importers are well covered," said Sergey Gudoshnikov, a senior economist with the London-based International Sugar Organization.
"Middle Eastern and North African countries will keep buying but they are relatively smaller importers."
March raw sugar futures on ICE fell 0.25 cent, or 1.3 percent, to 18.63 cents a lb by 12:31 p.m. EST (1731 GMT), after earlier trading as low as 18.53 cents, the lowest for the spot contract in nearly two years.
"A continued drift downward in prices would not be surprising considering we're in the third year of surplus," the ISO's Gudoshnikov said.
The move increased the spot contract's discount to the second position to around 0.18 cent per lb, the biggest since Sept. 28, from about 0.14 cent on Tuesday.
"They (trade) have got to push out the march spreads and get them wide enough so there's going to be some sort of carry in the market," said one U.S. dealer.
"The only way the market can carry it forward is to have wide switches so they can afford to store it in warehouses."
Dealers and analysts noted that some importing countries recently took measures to protect their domestic markets.
"Egypt and Vietnam have introduced import duties to avoid buying cheap sugar, and Pakistan is talking about introducing a subsidy on exports," Gudoshnikov added.
March white sugar on Liffe fell $5.50, or 1.1 percent, to $502.70 per tonne.
In cocoa, dealers eyed the expiry of Liffe's December contract, which went off the board at around a 14 pound discount to March after trading at a premium as wide as over 80 pounds last week <LCC-1=R>.
March cocoa futures on Liffe rose 28 pounds, or 1.8 percent, to close at 1,547 pounds a tonne.
Speculators have built up a large net long position in both the London and New York markets, which could support prices in the lead up to the end of the quarter as speculators attempt to their balance sheets.
"The managed long is progressively trying to push it up, but it's unlikely to get far beyond 1,600 pounds as there will be origin selling," a European analyst said.
Barry Callebaut AG said it saw modest growth in the global chocolate market in the year to August 2013, with demand from Asia likely to offset a sluggish European market.
The world's largest chocolate maker also said it would buy the cocoa ingredients business of Singapore-based Petra Foods for $950 million in cash.
On ICE, cocoa futures jumped with a lift from the firm sterling against the U.S. dollar, with early short-covering pushing prices higher. The market extended gains after breaking above the session highs from the past two days, dealers said.
March cocoa on ICE jumped $61, or 2.6 percent, to settle at $2,441 a tonne.
March arabica coffee futures eased 1.60 cents, or 1.7 percent, to $1.4790 per lb, moving within the previous session's range for the second straight day, after falling last week to $1.4635, a 2-1/2-year low.
Dealers said that investors were buying in anticipation that the annual reweighting done by commodities indexes will be supportive of arabica coffee.
"Everybody keeps pointing to the specs being so short in the market that that's a reason for the market to turn around, but the specs are the ones that are making the money," the U.S. dealer said.
"It's the bulls that keep trying to buy the market on these dips who keep getting run over."
It was unclear, however, whether any rally triggered by index-related buying could be sustained, given the bearish fundamentals that have helped push the market to its recent low.
"There's a massive index reweight, and the funds are very short. The question is whether the index reweight is going to trigger a proper short-covering rally or if the balance sheet is so negative that the market isn't going anywhere," said James Hearn, joint head of agriculture at Marex Spectron.
March robusta coffee futures inched up $4, or 0.2 percent, to $1,888 a tonne.
($1 = 0.6210 British pounds)
(Additional reporting by Nigel Hunt in London; Editing by Alison Birrane, Jane Baird and Grant McCool)