SOFTS-ICE coffee hits 2-1/2-yr low on excess supply, sugar jumps
* Plentiful arabica supplies weigh on prices
* Brisk pace of sugar exports seen from Brazil
* Cocoa dealers eye beginning of Ivory Coast auction
(Updates closing coffee/ sugar prices)
NEW YORK/LONDON, Dec 14 (Reuters) - Arabica coffee futures on ICE slipped to a 2-1/2-year low for the third straight session on Friday, while raw sugar recovered a bit after falling the previous session to the lowest level since August 2010, as both markets faced surplus supplies.
Cocoa futures consolidated higher as dealers monitored the start of Ivory Coast's 2013/14 crop forward sales.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, climbed as the U.S. dollar dropped, providing support to sugar and ICE cocoa futures.
The greenback weakened after a U.S. report on inflation showed prices fell in November for the first time in six months, which should allow the Federal Reserve to stay on its ultra-easy monetary policy path.
The weak dollar can support dollar-based commodities, making them cheaper to buy for investors using other currencies.
Arabica coffee futures on ICE Futures U.S. briefly felt support from the weak dollar but late-day long liquidation and investor selling pushed the market down to a new low.
"The specs are shorting it and there's long liquidation," one U.S. dealer said.
Arabica futures are in a clear downtrend with abundant supplies following a bumper crop in top producer Brazil. Additionally, speculators are holding a large net short position.
"I still think there's a lot of hedging that needs to be done. Any type of rally, Central America will be there to let the specs have it," said Nick Gentile, chief trader at Atlantic Capital Advisors in New Jersey.
"Right now it's an oversupplied market."
March arabica coffee futures closed down 0.45 cent, or 0.3 percent, at $1.4315 per lb, the lowest settlement for the second month since June 2010.
"Besides a record harvest in Brazil, there is also plentiful supply from other countries in Latin America," said Commerzbank in a daily commodities note.
Commerzbank added, however, it expected prices to pick up over the next few months with a smaller crop in Brazil likely next season - an off-year in its biennial crop cycle.
LOWER ROBUSTA STOCKS
In robusta coffee, certified stocks continued being drawn down, with the latest exchange data showing stocks held in NYSE Liffe nominated warehouses fell to 105,140 tonnes as of Dec. 10, down from 108,490 tonnes on Nov. 26.
Dealers monitored the premium on the front-month January contract over March <LRC-1=R>, which has widened sharply on Thursday to about $47 per tonne, partly due to depleted certified stocks. It narrowed during this session, trading around $37.
"The fact is there's less and less certified stocks and that can push the front-month up," said a European trader.
March robusta coffee futures closed down $20, or 1.1 percent, at $1,872 a tonne.
Raw sugar futures on ICE closed just above resistance at 19 cents per lb, basis the benchmark March contract.
March raw sugar futures on ICE rose 0.47 cent, or 2.5 percent, to close at 19.01 cents a lb, after dipping to the 28-month low of 18.31 cents the previous session.
Dealers said the outlook remained bearish with the third consecutive global surplus likely to push prices lower.
"Short-term any tentative rebound should be capped by the horizontal resistance zone at 19.00 to 19.05. Sugar will reverse downwards towards 18.25/18.20 next," Societe Generale analyst Stephanie Aymes said in a market note.
Dealers said a fast pace of exports from top producer Brazil showed firm demand.
"Demand for Brazilian raws has been strong in the fourth quarter, helped by weaker prices and cheap freight," said Peter de Klerk, analyst at Czarnikow.
"Brazil shipments will be a record for four out of the last five months of this year."
March white sugar on Liffe gained $8.90, or 1.8 percent, to settle at $508.70 per tonne after touching $495.00 on Thursday, the lowest level for the front month since June 2010.
In cocoa, March futures on ICE climbed $13, or 0.5 percent, to close at $2,435 a tonne.
"I think we'll stay within a range but it can still chop around a bit," said a London-based broker, referring to recent volatility.
Dealers said news that Ivory Coast had begun forward sales of its 2013/14 crop was likely to weigh on the market as it signalled sustained selling from the top producer.
"The market is unlikely to rally because everyone is anticipating origin selling around the corner," said the broker.
Liffe March cocoa futures ended up 15 pounds, or 1 percent, at 1,545 pounds per tonne.
Valid cocoa stocks in NYSE Liffe's nominated warehouses fell slightly to 48,330 tonnes as of Dec. 10, from 49,170 tonnes on Nov. 26, exchange data showed.
(Additional reporting by Nigel Hunt in London; Editing by Alison Birrane, Alden Bentley and Bob Burgdorfer)