SOFTS-Sugar dips on concerns easing over Australian rain, cocoa up

* Sugar retreats from Monday's short-covering rally

* Ivory Coast, Ghana seen behind in cocoa sales

* Vietnam robusta estimate lower than private sector

(New throughout, updates prices; adds second byline/dateline)

NEW YORK/LONDON, Jan 29 (Reuters) - Raw sugar futures on ICE dropped on Tuesday as concerns receded over potentially damaging rains in Australia, the world's third-biggest exporter, pulling the market off the previous session's steep gains.

Cocoa futures corrected up from a seven-month low and coffee futures were relatively unchanged in choppy trading.

Sugar prices retreated from Monday's surge to a two-week high, which was fueled by short-covering and concern about heavy rains in Australia.

"We had knee-jerk buying because of that," said James Cordier, founder and president at Liberty Trading Group in Tampa, Florida.

Australia's sugar crop is expected to avoid major damage from a tropical storm in eastern parts of the country, although some cane-growing areas have been hit in southern Queensland, an industry body said.

March raw sugar futures on ICE were down 0.41 cents, or 2.2 percent, at 18.32 cents a lb at 12:31 p.m. EST but remained above last week's more than two-year low of 18.06 cents.

Volume continued to be heavy after reaching nearly 146,000 contracts on Monday, the highest in 3-1/2 months, ICE data showed.

The market kept its bearish tone with expectations for a third consecutive global sugar surplus continuing to drag on sugar prices.

"I still think ultimately we are going to come lower because of the fundamental picture," a London-based broker said.

Dealers said technical resistance was also seen at around 19 cents, while support was at around 18 cents.

"It's hovering around the 10-day moving average of 18.45," a second broker said.

March white sugar on Liffe fell $8.00, or 1.6 percent, to $486.40 a tonne.

COCOA BOUNCES

March cocoa futures on ICE rose $34, or 1.6 percent, to settle at $2,195 a tonne. They dipped as low as $2,157 on Monday, the weakest level for the front month since June 2012.

Liffe May cocoa futures rose 12 pounds or 0.8 percent to finish at 1,444 pounds per tonne.

"With the markets crashing like cocoa has recently, the price gets a little bounce. The market was slightly oversold the past couple days as we traded into new lows," Cordier at Liberty Trading said.

Cocoa futures on ICE reached a seven-month low in Monday's dealings.

The cocoa market has been under pressure from expectations of forward sales from West Africa, combined with a pick-up in supplies arriving at ports of top producer Ivory Coast for export.

"Ultimately both Ivory Coast and Ghana are undersold in their forward selling, so that is the single biggest reason you are going to see more selling pressure at every rally," said Kona Haque, an analyst at Macquarie bank.

Arabica coffee prices continued to find light support on concerns that the disease roya, or leaf rust, will curb production in Central America.

Central America produces around one-fifth of the world's arabica coffee.

The market was choppy, however, as it lacked any real direction, remaining within the same range it's held since hitting a 2-1/2 month low in December at $1.4125 per pound, basis March, and reaching a two-month high at $1.579 per lb earlier this month.

March futures on ICE were up 0.35 cents or 0.2 percent to $1.4935 per lb.

Arabica coffee futures prices are only slightly higher than where they opened 2013, and there was talk that any damage from roya may have been overstated.

The analyst Haque said many people believe the impact of roya disease is being overstated "because if the farmers make enough noise they will get more government assistance."

March robusta coffee futures fell $6 or 0.3 percent to $1,936 a tonne.

Vietnam's 2012/2013 coffee crop harvest has ended with output easing by as much as 25 percent to 18.75 million bags, the Vietnam Coffee and Cocoa Association (Vicofa) said, after a record high production in the previous season.

This is below the median forecast of 25 million bags from a Reuters poll earlier this month, but Vicofa's numbers are consistently conservative in comparison to private-sector estimates. ($1 = 0.6367 British pounds)

(Editing by Jane Baird and Grant McCool)