SOFTS-Arabica at 2-1/2-mth high, cocoa meanders after weak data
* Europe 4th-quarter cocoa grind down 6.2 pct
* Sugar dealers wary of potential short covering rally
* COMING UP: N. American Q4 2012 cocoa grind data Thursday
(New throughout, updates prices; adds analyst comment, second byline/dateline)
NEW YORK/LONDON, Jan 15 (Reuters) - Arabica coffee futures on ICE rose to a 2-1/2-month high on Tuesday on chart-based buy signals, while cocoa was little changed in range-bound dealings after weak European grind data for the fourth-quarter of 2012 was in line with expectations.
Sugar also declined as the ample supplies continued to weigh on the market.
Arabica on ICE Futures U.S. rose in an outside reversal, exceeding the previous session's low and then the high, after breaking above the 50-day moving average late last week. Dealers holding short positions covered, lifting the market.
"People who are short no longer want to be short," said Adam Sarhan, chief executive of New York-based Sarhan Capital.
Speculators are holding a large net short position and the futures market is showing signs that it may have found a bottom at a 2-1/2-year low at $1.3225 basis the spot contract in November.
"You're seeing a rounded bottom after a big move down," Sarhan said.
"Is this going to be a false breakout or is it going to be the beginning of a new uptrend? That's what investors are battling back and forth trying to decide, from my point of view."
ICE March arabica coffee was up 1.25 cents, or 0.8 percent, at $1.5455 per lb by 12:22 p.m. ET (1722 GMT), after hitting a 2-1/2-month high at $1.5650.
March robusta coffee futures turned down $13, or 0.7 percent, to $1,958 a tonne.
"There's boatloads of (robusta) coffee, but it's all going straight into the roasters. They've got a decent appetite for robustas," the broker said.
Cocoa futures were little changed, with both ICE and Liffe markets trading within the previous session's ranges.
ICE cocoa was slightly lower after European Cocoa Association data on fourth-quarter cocoa grindings showed a fall of 6.2 percent, within expectations for a drop of 6 percent to 10 percent.
"It's come in smack on where we thought the headline number would be," said Jonathan Parkman, joint head of agriculture at Marex Spectron.
In Malaysia, cocoa grindings increased 3.6 percent in the fourth quarter from the same period a year earlier, while Brazil's cocoa industry processed a record quantity of beans in 2012.
Dealers awaited the Thursday publication of North American grindings data, scheduled for 2100 GMT. Estimates ahead of the data range from 5 percent lower to 1 percent higher, versus the fourth quarter 2011.
"As people begin to digest the numbers and add things together, rather than just a gut reaction on the ECA grind, they'll probably come to the conclusion that grinds haven't been too bad," Parkman said.
"It looks as if the grinds were only about 2 percent down across the reporting areas."
ICE March cocoa futures closed up $4, or 0.2 percent, at $2,270 per tonne.
Parkman warned of pitfalls in using grindings as an indicator of consumption.
"We like to use grindings as a proxy for consumption, but as was shown in 2011/12, that was a hazardous thing to do. Grinds ran well ahead of consumption in the period of October-March and well behind consumption in the period of April-September," he said.
Benchmark London May cocoa futures closed up 4 pounds, or 0.3 percent, at 1,458 pounds per tonne.
March raw sugar futures on ICE slipped 0.26 cent, or 1.4 percent, to 18.64 cents a lb.
Dealers said a large speculative short position on ICE raw sugar made the market vulnerable to a short-covering rally.
"We're fundamentally bearish, but we're loath to get too bearish when you've already got all these funds short," a European analyst said.
Abundant supplies have weighed on the market for months, and fundamentally there has been nothing to convince market participants that prices should be higher.
If the market breaks above 19.67 cents, it will confirm a bullish technical signal, Societe Generale said in a commodities note.
March white sugar on Liffe fell $6.50, or 1.3 percent, to $501.20 per tonne.
"When the market dips, you get little bits of physical offtake but it's relatively quiet," the analyst said.
($1 = 0.6224 British pounds)
(Editing by Anthony Barker, Jane Baird and Steve Orlofsky)