SOFTS-Cocoa sinks again as specs unwind long positions
* Speculators hold large net longs in ICE and Liffe cocoa
* Arabica coffee prices consolidate above 2-1/2 year low
* Markets closed on Tuesday for Christmas holiday
(Updates prices; adds byline, dateline and comment)
NEW YORK/LONDON, Dec 24 (Reuters) - Cocoa futures in New York sank for a sixth straight session to fresh five-month lows on Monday as speculative investors and producers continued to bet on lower prices due to plentiful supplies and sluggish demand.
Sugar also retreated on weak fundamentals while arabica coffee eked out gains in thin holiday trade.
"Mostly it's been spec activity. Maybe there's been some origin selling too. But there are no fundamentals to drive (cocoa) higher," said Jack Scoville of the Price Futures Group in Chicago.
March cocoa futures on ICE dropped $39, or 1.7 percent, to settle at $2,273 a tonne, just $3 shy of its lowest level since July 26. Relentless selling has wiped out 7 percent of the value of chocolate's main ingredient over six sessions and sent prices to July lows on Friday.
Downwards pressure is expected to continue while speculators unwind their long positions as concerns about tightening supplies from West Africa wane. Recent violence in the world's No. 1 grower, Ivory Coast, does not appear to have disrupted trade of the commodity, traders said.
"Specs have found themselves on the wrong end of the trade. They have a huge (long) position," said Shawn Hackett of Hackett Financial Advisors in Florida.
In the week to Dec. 18, speculators had maintained their large net long position in cocoa at close to three-year highs, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.
Liffe March cocoa settled 9 pounds lower at 1,460 pounds a tonne after touching 1,455 pounds, the lowest level for the front month since June 1.
"It does look technically weak," one London dealer said, adding, however, that the significance of the price decline was diminished by very light pre-holiday volume.
Speculators are also holding a large net long position in Liffe cocoa, exchange data showed on Monday.
Cocoa underperformed a weak broader commodity market dragged lower by oil amid concerns that the stalemate in the U.S. budget crisis will hurt demand.
ICE Futures U.S. will be shut on Tuesday. On Liffe, the markets will remain closed Dec. 25-26 and resume normal trading on Dec. 27.
Arabica coffee futures on ICE crept higher as the market continued to consolidate above a 2-1/2 year low set earlier this month.
"It (trade) is mainly tidying up before the Christmas break," a London trader said, adding volumes were boosted by several against actuals (AA) trades which can involve the exchange of futures for physical market positions.
March arabica coffee futures on ICE rose 0.3 percent to $1.47 per lb, with technicians saying prices could rise as high as $1.53 after completing a five-wave cycle.
March robusta coffee futures settled $12 higher at $1,906 a tonne.
Raw sugar futures on ICE were hit by a late sell-off with investors increasingly cautious about a growing excess of the sweetener, particularly from top producer Brazil.
Holding just above a key psychological support at 19 cents, the most-active March was off 0.23 cent, or 1.2 percent, at 19.02 cents a lb. The market held steady above a multiyear low of 18.31 cents hit earlier this month.
Dealers said the market was rangebound with the upside capped by Brazilian producer selling around 19.50 cents.
"The market is as stuck as the U.S. politicians are with the "fiscal cliff," said Michael McDougall, a vice president for brokerage Newedge USA in New York.
March white sugar on Liffe settled $1.80, or 0.35 percent, lower at $516.50 per tonne.
China will stockpile 3 million tonnes of sugar from the domestic market for the 2012/13 crop year to help stabilize home prices, an industry website said on Tuesday, citing a government announcement.
(Editing by James Jukwey and Jim Marshall)