SOFTS-ICE cocoa hits 6-month low as crop outlook improves
* Lower sugar prices stimulate demand
* Liffe certified cocoa stocks forecast to rise
* Leaf rust threatens coffee crops in Central America
(Adds details, quotes, updates prices)
LONDON, Jan 25 (Reuters) - Cocoa futures on ICE sank to a six-month low on Friday as good supply prospects from top growing region West Africa weighed on prices while raw sugar eased and arabica coffee edged higher.
March cocoa futures on ICE stood $18 or 0.8 percent lower at $2,177 per tonne at 1535 GMT after earlier dipping to $2,176, the weakest level for the front month since July 2012.
"It's a combination of the main crops seeming better than expected and mid crops looking good," said a European trader.
May cocoa futures on Liffe fell 14 pounds or 1.0 percent to 1,432 pounds a tonne.
Dealers noted the flow of cocoa for gradings on the Liffe exchange had picked up, contributing to a weakening of the market structure, with March trading at a 10 pound discount to May after briefly trading at a premium <LCC-1=R>.
"If you look at the structure, the weakening of the March/May has been linked to the gradings," said a second trader.
"This will increase the number of certified stocks."
Valid cocoa stocks in NYSE Liffe's nominated warehouses rose to 44,020 tonnes as of Jan. 21 from 43,020 tonnes on Jan. 7, exchange data showed.
Raw sugar futures on ICE eased towards a more than two-year low on Friday on producer selling ahead of a second consecutive large crop from Brazil.
Dealers said the market may derive some support ahead of the release of the weekly CFTC Commitment of Traders report to be issued later on Friday which may show a further widening in the already large speculative net short position.
"Technically, March (raws) is stuck in a range and we will see if there is any pre-emptive buying this afternoon in anticipation of the Commitment of Traders report," Nick Penney of brokerage Sucden Financial said in a market note.
"We would rather hold fire at these levels and suspect a base in being formed in the market short term," he added.
March raw sugar futures on ICE were 0.17 cent or 0.9 percent lower at 18.32 cents a lb. The contract fell to 18.06 cents on Wednesday, the lowest level for the front-month since August 2010.
Dealers said lower prices had stimulated demand on the physical sugar market. "There has been some decent offtake this week," said a London-based broker.
March white sugar on Liffe fell $3.10 or 0.6 percent to $484.20 per tonne. The contract dipped to $480.80 on Wednesday, the lowest level for the front month since June 2010.
March arabica coffee futures on ICE rose 0.40 cents or 0.3 percent to $1.4695 per lb with the market consolidating after last month's fall to a 2-1/2 year low.
Expectations for a record off-year crop in Brazil's biennial crop cycle were bearish for prices, with the government crop supply agency Conab forecasting Brazil will grow 47 million to 50.2 million 60-kg bags of coffee in the 2013/14 harvest.
"Conab officials are confident that improved cultivation methods and the planting of new higher-yield coffee shrubs will erode the differences between high and low-yield years," said Commerzbank in a commodities note.
Dealers monitored reports on coffee tree disease known as roya or leaf rust in Central America and Mexico.
Guatemala could declare a national emergency early next month to fight the spread of the fungus while Honduras has cut its 2012/13 coffee production estimate by 13.6 percent.
Commerzbank noted that Central America accounts for around 20 percent of world arabica production and the disease concerns should halt any further slide in prices.
March robusta coffee futures were $3 lower at $1,943 a tonne.
(Additional reporting by Nigel Hunt; editing by James Jukwey and Keiron Henderson)