SOFTS-ICE coffee eases but holds above multi-year low
* Favourable crop outlooks in Brazil weigh on coffee, sugar
* Modest delivery expected at March white sugar expiry
(Adds quotes, updates prices)
LONDON, Feb 13 (Reuters) - ICE arabica coffee futures were slightly lower on Wednesday while raw sugar posted modest gains as both markets consolidated just above recent multi-year lows, struggling to absorb excess supplies.
Cocoa futures on Liffe edged up as the market hovered just above a 10-month low set during the prior session.
Dealers said the prospect of large crops in Brazil this year was exerting downward pressure on coffee and sugar prices with both markets already oversupplied.
May arabica coffee futures on ICE stood 0.35 cent or 0.2 percent lower at $1.4290 per lb at 1522 GMT. The contract fell to $1.4125 on Tuesday, the lowest level for the benchmark second month since June 2010.
"I think everyone has come to the consensus that it is going to be a large crop," Rabobank senior analyst Keith Flury said, referring to this year's Brazilian coffee harvest.
Flury said the market was holding around the $1.40 level on the front month contract which dipped as low as $1.3855 on Tuesday but was trading around $1.4040 on Wednesday.
He noted hedge funds were rolling forward short positions when prices dipped below $1.40, while above that level there appeared to be origin selling.
"Their (producers') targets for where they sell coffee have eroded as the market continues to fall," he added.
May robusta coffee futures on Liffe rose $8, or 0.4 percent, to $2,100 a tonne.
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Raw sugar futures on ICE were hovering just above last week's more than two year low.
"There is a looming Brazilian sugar cane harvest which is the key bearish factor in the market," Flury of Rabobank said, adding Brazilian sugar production should rise despite a higher proportion of the cane crop being used by the ethanol sector.
March raw sugar futures on ICE were 0.16 cent or 0.9 percent higher at 18.24 cents a lb. The market touched 18.03 cents on Friday, the lowest price for the benchmark front month since August 2010.
"It appears that ongoing concern about current surplus supplies is keeping the bearish tone in the market," Commonwealth Bank of Australia analyst Luke Mathews said in a market note on Wednesday.
"This is despite recent reports that Brazilian ethanol prices are now trading at a premium to sugar and that production in India and Thailand may disappoint in 2013," he added.
Dealers noted the front month had moved to a premium of around 0.10 cent <SB-1=R> in the run up to the options expiry at the end of this week.
"The March/May spread has been active as traders reduce exposure and speculators and hedge funds roll their shorts forward," Nick Penney of Sucden Financial said in a market note.
March white sugar on ICE rose $3.00 or 0.6 percent to $487.10 per tonne.
Dealers said the key focus was the expiry of the front month later in the day. They estimated around 80,000 to 100,000 tonnes of white sugar was likely to delivered against the contract, mainly from Guatemala.
Cocoa futures on Liffe edged up although the market remained within striking distance of the prior session's 10-month low.
May cocoa futures on Liffe were up 5 pounds or 0.35 percent at 1,426 pounds a tonne. The contract dipped to 1,411 pounds on Tuesday, the lowest level for the second month since April, 2012.
Dealers said the market had been weighed by forward selling of 2013/14 West African crops but the scope for further losses may be limited with production stagnant and grindings seen rising slightly during the next couple of seasons.
May cocoa on ICE was off $6 or 0.3 percent at $2,164 a tonne.
Dealers said volume had been boosted by rolling forward of positions out of March ahead of Thursday's first notice day for the front month contract.
(Reporting by Nigel Hunt; Editing by Anthony Barker)