SOFTS-ICE sugar, coffee at lowest since 2010 on excess supply
* Scope for further losses on ICE sugar appears limited
* Nearby premium for Liffe robustas surges
* Ivory Coast begins forward sales of 2013/14 cocoa
(New throughout, updates prices; adds trade comments, second byline/dateline)
NEW YORK/LONDON, Dec 13 (Reuters) - Raw sugar and arabica coffee futures on ICE extended their losses and f ell to their lowest levels in more than two years on Thursday, prolonging slides driven by surplus supplies.
Cocoa futures on both Liffe and ICE Futures U.S. were also lower, giving up most of the prior session's technically driven gains, as traders said top producer Ivory Coast had begun sales for the 2013/14 season.
The softs complex fell along with the Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, as investors looked past the U.S. Federal Reserve's announcement of further monetary stimulus and refocused on the unresolved U.S. budget showdown.
March raw sugar futures on ICE were down 0.14 cent, or 0.2 percent, at 18.52 cents per lb by 12:22 p.m. EST (1722 GMT) after dipping to 18.31 cents, the lowest level for the benchmark front month since August 2010.
Profit-taking was seen lifting the contract off its session low.
"We're still looking at a lot of options around that 18 cent level," said Michael McDougall, a vice president for Newedge USA in New York.
Open interest is heavy at 18 cents in both the January options, which will expire on Dec. 17, and March options, dealers said, noting this pressured the futures market.
"It's a race against the clock for anybody who wants to probe that 18 level to see if some of that January position might be uncovered, people who are short the 18 put and not covered in futures," McDougall said.
Prices have almost halved from a peak of 36.08 cents in February 2011, with successive substantial global surpluses in the 2011/12 and 2012/13 seasons leading to a build-up in stocks and sparking a sustained bear market.
Romain Lathiere, head of dealing at Diapason Commodities Management, said the scope for further losses appeared limited, adding that the market may consolidate before rebounding.
"The downtrend has been really long. All the (bearish) news has already been priced in," he said. "It is a matter of when we will see a rebound. I wouldn't want to be short right now."
Some others, however, saw the prospect of further losses.
"I still think the market is going to go a lot lower in the weeks to come. All the news that we have from Brazil, Thailand and India shows that there's going to be a lot of sugar around," a London-based dealer said.
Total open interest tumbled by more than 7,000 lots on Dec. 12 to 757,167 lots, ICE data showed, indicating liquidation took place then, dealers said.
March white sugar on Liffe fell 70 cents, or 0.1 percent, to $499.50 a tonne after touching $495.00, the lowest level for the front month since June 2010.
Arabica coffee futures on ICE have followed a similar pattern, with a large crop in Brazil and a favorable outlook for next year's harvest in the world's top producer leading to a sustained decline in prices.
March arabica coffee futures dropped 2.65 cents, or 1.8 percent, at $1.4385 per lb after dipping to $1.4370, the lowest level for the second month since June 2010.
Diapason's Lathiere said that both raw sugar and arabica coffee could derive support from end-of-year rebalancing of commodity indexes, which can lead to buying of markets that have underperformed and have reduced their weighting.
"It will bottom for a while and then rise up," he said of the coffee market.
Coffee stocks held in European ports fell 2.6 percent during October, figures from the European Coffee Federation showed.
March robusta coffee futures were up $1, or 0.05 percent, at $1,891 a tonne, while the nearby premium <LRC-1> soared to around $40, from $7 the previous session, supported by the current low level of certified stocks.
Liffe certified coffee stocks stood at 108,490 tonnes in late November, compared with almost 300,000 tonnes a year earlier.
Cocoa futures were also lower, with hedge selling expected to pick up as top producer Ivory Coast began forward sales of the 2013/14 crop.
March cocoa on Liffe fell 17 pounds, or 1 percent, to close at 1,530 pounds a tonne, almost completely erasing the prior session's gains.
The contract gained 28 pounds on Wednesday. The rise was viewed to be driven largely by technical factors, though some industry buying may have helped to strengthen prices.
Dealers noted deliveries against the December Liffe contract that expired on Wednesday totaled a modest 13,220 tonnes.
December rose to a premium of more than 80 pounds to March at one stage before expiring at a small discount.
"The explanation behind the high switch level was the extremely low level of certified stocks and the inability of the market to grade fresh cocoa in response to high spread prices," said Eric Sivry of Marex Spectron.
Sivry said that low certified stocks could cause a premium to develop on the March contract, which is trading at a small discount to May <LCC-1=R>.
"The low level of certified stocks shows no signs of being replenished any time soon, and many fear that a 'contagion' effect may soon impact the March/May spread. If this was the case, the cocoa market could remain tense."
March cocoa futures on ICE closed down $19, or 0.8 percent, at $2,422 a tonne.
($1 = 0.6205 British pounds)
(Additional reporting by Sarah McFarlane in London; Editing by David Goodman, Jane Baird and Grant McCool)