SOFTS-Liffe cocoa breaks key support to set six-month low
* Liffe cocoa breaks key technical level
* Sugar producers lower price expectations
(Adds details, quotes, updates prices)
LONDON, Dec 20 (Reuters) - Cocoa futures on Liffe dipped to a six-month low on Thursday, extending the previous session's losses, after breaking below significant support levels on historical price charts.
Raw sugar futures fell towards multi-year lows, under pressure from a third consecutive global surplus, while arabica coffee was little changed.
Cocoa futures on Liffe hit the six-month low in early trading, pulled lower by technical selling combined with forward selling from producers in West Africa.
"We're breaking to the downside. We've clearly gone through a key technical point in London of 1,509 pounds basis the second continuation month," said Eric Sivry, head of agri-options brokerage at Marex Spectron.
May cocoa futures on Liffe traded down 7 pounds or 0.5 percent at 1,485 pounds per tonne at 1437 GMT after sinking to 1,473 pounds, the lowest level for the second month since June 25.
However, dealers noted that the market was supported by a large speculative long position, which was unlikely to be liquidated before year-end, along with industry buying.
"We've broken the range and now there's a path that's open to go to lower levels but speculators are very long and may want to avoid a bloodbath before year end and secondly the industry are buying a lot of cocoa on a scale-down basis," said Sivry.
March cocoa futures on ICE were off $23 or 1.0 percent at $2,335 a tonne.
Cocoa butter hovered at its highest ratios in three years in Asia on tight supply in Europe, but some grinders held on to stocks in an effort to persuade consumers also to buy powder, dealers said on Thursday.
March raw sugar futures on ICE eased 0.26 cents or 1.35 percent to 18.97 cents a lb. Last week the contract dipped to 18.31 cents, the lowest level for the benchmark front month since August 2010.
Producer selling at around 19.5 cents per lb, along with rising estimates for the 2012/13 global surplus, will limit any rises, dealers said.
"Of course they (producers) will price lower than what they hoped to," said a European analyst.
"This is the reason why each time we have a rebound the top of the rebound is lower and lower - it's declining," said the analyst, adding that one of the factors driving this was the weaker Brazilian real.
The weakening currency in top sugar producer Brazil has shielded farmers to some extent from the fall in ICE raw sugar prices.
March white sugar on Liffe fell $6.60 or 1.3 percent to $511.200 per tonne.
Arabica coffee futures on ICE continued to hover above a 2-1/2 year low set last week with plentiful supplies following a bumper crop in Brazil keeping the market on the defensive.
March arabica coffee futures on ICE rose a marginal 0.15 cent or 0.1 percent to $1.4505 per lb. Last week the second month fell to $1.422, the lowest level on a second-month basis since June 2010.
"I think we will see a new low on New York before the end of the year," said a London-based broker, noting the bearish fundamentals of the over-supplied market.
"Roasters have done what they need to do at these prices and they don't want to push the market higher."
March robusta coffee futures were up $26 or 1.4 percent at $1,895 a tonne.
Dealers said shipments from top robusta producer Vietnam were running above last year's pace although strong demand was helping to keep Liffe certified stocks at low levels.
"Although we expect world coffee demand to remain healthy, driven by emerging countries, the surge in Vietnamese supplies will prevent any recovery in prices until early next year," Ecobank said in a research note on Thursday.
Vietnamese robustas were offered at smaller discounts this week as trading houses stocked up before the end of the crop season, while demand from domestic roasters kept Indonesian premiums at their strongest since May, dealers said on Thursday.
(Additional reporting by Nigel Hunt; Editing by Anthony Barker)