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SOFTS-Liffe cocoa holds above 8-1/2 month low, weather eyed

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Published: Tuesday, 8 Jan 2013 | 8:28 AM ET
By: Sarah McFarlane

* Harmattan winds not expected to impact cocoa supply

* Raw sugar expected to test 18 cents -Sucden

(Adds details, quotes, updates prices)

LONDON, Jan 8 (Reuters) - Cocoa futures on Liffe slipped to near an 8-1/2 month low on Tuesday as dealers eyed weather conditions in top growing region West Africa, while raw sugar was firm and arabica coffee prices eased.

Cocoa edged lower as dealers eyed weather conditions in West Africa, where Harmattan winds were not expected to impact supply.

The intensity of the dusty Harmattan, which blows southward from the Sahara Desert from December to March, could determine the size and the quality of the Ivorian 2012/13 crop as it enters the last stage of the main harvest, farmers said.

"If it stays dry for much longer, then of course that will start to be a concern," a London-based broker said.

Liffe May cocoa futures were 2 pounds lower at 1,449 pounds ($2,300) at 1301 GMT after dipping to 1,426 pounds the previous session, which equalled Friday's 8-1/2 month low for the second month.

Dealers monitored expectations for Europe's fourth-quarter cocoa grindings, due to be published on Jan. 15, with forecasts for a fall of around 6 percent.

ICE March cocoa futures eased $7 or 0.3 percent to $2,260 per tonne.

SUGAR FIRM

Raw sugar futures edged higher, consolidating inside of the price range in trading over the past month, with dealers noting the market was vulnerable to breaking below the recent range.

March raw sugar futures on ICE were up 0.01 cent at 18.87 cents a lb, above its more than two-year low hit in December of 18.31 cents.

"We expect stops below 18.67 and above 19.10," Thomas Kujawa, at brokerage Sucden Financial, said.

"We continue to expect the market to gravitate to support levels rather than resistance and in the medium term a test of the support around 18 cents."

Deutsche Bank said that as the market had breached 19 cents, it was possible prices could slide towards 16 cents, although producers' reluctance to sell could stem losses.

"With producer selling likely to dry up as prices head lower, in our view it is unlikely for prices to approach this level," the bank said in a commodities note.

March white sugar on Liffe fell $1.90 or 0.4 percent to $508.90 per tonne.

Arabica coffee futures eased, with March down 0.6 cent or 0.4 percent to $1.4980 per lb, as index rebalancing was expected to support the market.

"Certainly coffee and sugar have both got some index reweighting to be done," a London-based broker said.

"The problem is always that the market pre-empts it, so I don't think it's a major issue," the broker said, noting there was speculator buying on Monday ahead of expected index buying.

March robusta coffee futures rose $5 or 0.3 percent to $1,968 a tonne.

Coffee exports by Vietnam, the world's top robusta producer, could range from 130,000 tonnes to 180,000 tonnes this month on ample supply after the end of the harvest, with buyers taking deliveries to cover short positions, traders said on Tuesday.

Dealers said Vietnam was behind in its sales compared with previous years as sellers hoped for higher prices.

"There has been a view that the market has been undervalued so they've held back a little bit," said the broker. ($1 = 0.6218 British pounds)

(Reporting by Sarah McFarlane; editing by Keiron Henderson and Jane Baird)

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*Raw sugar expected to test 18 cents- Sucden. LONDON, Jan 8- Cocoa futures on Liffe slipped to near an 8-1/ 2 month low on Tuesday as dealers eyed weather conditions in top growing region West Africa, while raw sugar was firm and arabica coffee prices eased.

   
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