SOFTS-Arabicas recover after hitting 32-month low, sugar dips
* Lack of producer selling due to Brazil, Vietnam holidays
* ICE volumes heavy on spread-trading
* Cocoa rises from previous low on short-covering
(New throughout, updates prices; adds trade comments, second byline/dateline) NEW YORK/LONDON, Feb 12 (Reuters) - ICE arabica coffee futures turned higher on Tuesday after falling to the lowest in more than 2-1/2 years, as the Brazilian Carnival holiday kept producers on the sidelines, and raw sugar fell, gravitating toward a technical support level. Cocoa futures declined after choppy trading with the U.S. market dealing in heavy trade with the focus on March/May spreading. Second-month arabica coffee futures on ICE rose 0.75 cent, or 0.5 percent, to $1.437 per lb at 12:48 p.m. EST (1748 GMT). Earlier in the day, the price touched the lowest level since June 2010 at $1.4125 per lb, pressured by expectations of a huge "off-year" crop in top producer Brazil. A recovery in Colombian arabica output also weighed on prices. "There is meant to be an abundance of arabicas. People are playing the arbitrage with robustas," a coffee futures broker said. "It is the Tet holiday in Vietnam, and people perceive that as a period when producers back away from the market." May robusta coffee futures on Liffe eased $6, or 0.3 percent, to settle at 2,092 a tonne, having hit a four-month high of $2,131 on Friday. Recent arabica price declines have kept physical buying minimal, as roasters hesitate to buy into a falling market. "A lot of traders in coffee have been pushing the market down, but the fundamentals are turning slightly. It doesn't bear out that we should be at almost three-year lows," said James Cordier, founder and president of Liberty Trading Group in Tampa, Florida. ICE arabica futures have fallen nearly 10 percent over the last 16 sessions. Even threat of damage to South American crops hefty supplies weighing on the market. Birgit Wippler, a soft commodities analyst with F.O. Licht in Germany, said she saw downside price risk because the weight of supply exceeded bullish factors such as roya, which has hammered coffee crops in Central America. ICE arabica volumes were heavy on Tuesday, reaching more than 47,000 lots as of 12:44 p.m. EST, according to preliminary data. Traders cited spread-buying behind the volumes, as the Brazilian Carnival holiday kept physical business quiet. The May contract recently surpassed the spot contract as the most active.
SUGAR GRAVITATES TO RECENT LOWS March raw sugar futures on ICE were down 0.31 cent, or 1.7 percent, at 18.12 cents a lb, hovering near a 2-1/2-year low of 18.03 cents per lb touched on Friday. "With option expiration on Friday, there's a large open interest around the 18-cent level, so there's solid support there. The market keeps bouncing off that," said Boyd Cruel, softs analyst for Vision Financial Markets in Chicago. ICE raw sugar futures were also underpinned by a lack of Brazilian producer selling, dealers said. Some saw pressure coming from the strong dollar. March white sugar on Liffe was down $4, or 0.82 percent, at $484.50 a tonne. Traders anticipated a modest delivery against expiry of the March white sugar contract on Wednesday. "The situation vis-a-vis March London, expiring tomorrow, is still unclear," Nick Penney of brokerage Sucden Financial said. "The main sugars expected to be delivered are Central American and some Argentine. We foresee a low delivery this time around." May cocoa on Liffe dropped 2 pounds, or 0.1 percent, to settle at 1,421 pounds a tonne. Benchmark May cocoa futures on ICE slid $2, or 0.09 percent, to finish at $2,170 a tonne, reversing direction from earlier gains. Dealers said upside was capped by good supply prospects in West Africa and an anticipated backlog of origin forward sales. ($1 = 0.6385 British pounds)
(Reporting By Chris Prentice; Editing by Grant McCool)