SOFTS-ICE sugar, coffee fall on stronger dollar, supply
* Improving Brazil crop outlook weighs on sugar
* Arabicas trade above a more than 2-1/2-year low
* More W. Africa forward selling to weigh on cocoa
(Adds ISO 2012/13 global sugar surplus forecast; updates prices)
LONDON, Feb 21 (Reuters) - ICE sugar and coffee fell on Thursday, weighed by heavy supplies and a stronger dollar on worries that the U.S. economic stimulus may soon dry up, while cocoa edged higher in a technical correction to earlier losses.
The euro hit a six-week low against the dollar and fell more than 1 percent against the yen on Thursday, hurt by fresh evidence the euro zone economy is struggling.
March raw sugar futures on ICE traded down 0.21 cent or 1.14 percent at 18.14 cents per lb at 1525 GMT, after hitting 17.87 cents a lb a week ago, its lowest level since August 2010.
"It's a macro 'risk-off' day," said Kona Haque, soft commodities analyst with Macquarie Bank, referring to the slide of the soft commodities complex.
"The commodities basket is suffering uncertainty over quantitative easing. Then European PMI data was also bearish for risk assets."
On Thursday, "flash" PMI activity data for February, one of the earliest monthly indicators of economic activity, pointed to continued weakness in the euro zone, keeping alive risks of an interest rate cut by the European Central Bank in coming months.
"For now, the market will continue to consolidate around the recent lows," one senior London-based broker said. "I would certainly not be surprised if we were to remain in a 17.50/18.50 cents per lb trading range until after the March expiry."
The ICE March contract expires on Feb. 28.
Nick Penney of brokers Sucden Financial Sugar said traders had become sensitive to availability of prompt or nearby sugars during the current inter-crop period in top producer Brazil.
"With availability of centre-south Brazilian sugars lower than during the season, traders may be looking to absorb Central American or even Thai sugar and attract them to the tape (expiry)," Penney said.
Heavy supply prospects kept prices under pressure, with an improving crop outlook for Brazil.
The International Sugar Organization (ISO) in its quarterly report on Thursday forecast a global sugar surplus of 8.526 million tonnes in 2012/13, up from 6.479 million tonnes in 2011/12.
May white sugar on Liffe eased $2.20 or 0.44 percent at $499.00 a tonne in moderate volume of 2,957 lots.
Threats of dockside strikes starting later this week in Brazil have put the country's agriculture sector on edge as the largest soybean crop ever arrives at already congested ports.
Haque said she saw no immediate market impact from the strike threats as the inter-crop period was under way in Brazil and the bulk of the harvest would not move until mid-year.
May arabica coffee futures on ICE fell 1.8 cent or 1.27 percent to $1.3985 per lb, above a more than 2-1/2 year low of $1.3760 per lb struck on Tuesday, with ample excess supply weighing on prices.
Dealers noted concerns over the tree-killing fungus roya after Central American agriculture ministers said its spread was expected to cost the region's coffee industry roughly half a billion dollars in the current harvesting season.
Analysts said the market impact of roya was limited due to expectations of plentiful supplies from Brazil and Colombia, and a switch by many roasters to robustas from arabicas in blends.
"The concerns in Central America are not catastrophic for the world market, but it is something we need to keep an eye on for the 2013/14 season," Haque said.
Speculators have taken a record short position in the ICE arabica market.
May robusta coffee futures on Liffe eased $17, or 0.82 percent, to $2,046 a tonne in slim volume of 3,310 lots.
May cocoa futures on ICE edged up in a technical correction to earlier losses and rose $12 or 0.57 percent to $2,125 per tonne.
May cocoa on Liffe also reversed earlier losses and rose 9 pounds or 0.64 percent to 1,422 pounds a tonne in light volume of 3,078 lots, above Tuesday's 10-month low of 1,403 pounds.
Cocoa dealers said the West African mid-crop production could be an all-time high due to favourable weather.
Expectations of more West African forward selling weighed on cocoa.
"While you still have more forward selling to do, you are at risk of a weak market until such time as grindings (a measure of demand) pick up," Haque said.
Ghana's cocoa main crop purchases hit 581,505 tonnes by Feb.7 since the season started Oct. 12, down 17.1 percent compared with the same period last year, data from industry regulator Cocobod showed on Thursday.
($1 = 0.6535 British pounds)
(Editing by William Hardy and James Jukwey)