SOFTS-ICE sugar up after hitting 2-1/2-year low, helped by dollar
* Sugar set for fourth straight global surplus in 2013/14
* Arabica supported by likely fall in Central America output
* Rains in West Africa improve cocoa's mid-crop outlook
(New throughout, updates prices; adds trade comment, second byline/dateline)
NEW YORK/LONDON, Feb 27 (Reuters) - ICE raw sugar futures turned positive after tapping a 2-1/2-year low on Wednesday, finding support from a firm commodity complex as the U.S. dollar fell, while cocoa traded little changed as rains improved the crop outlook in West Africa.
Coffee prices on ICE Futures U.S. and Liffe were mixed, with the market caught between concerns about output and quality in Central America, and expectations for a huge crop in Brazil.
The dollar weakened as U.S. Federal Reserve Chairman Ben Bernanke repeated testimony to Congress, defending the U.S. central bank's monetary easing.
The Thomson Reuters-Jefferies CRB index, a benchmark for global commodities made up of 19 markets, climbed about 0.3 percent. A weak U.S. dollar can spur buying of dollar-traded commodities by investors holding other currencies.
Raw sugar futures trading on ICE turned higher after inching down to a 2-1/2-year low on follow-through weakness.
March raw sugar futures on ICE, which expire on Thursday, were up 0.09 cent, or 0.5 percent, at 17.88 cents per lb by 12:49 p.m. EST (1749 GMT). They earlier dipped to 17.75 cents, the lowest for the front-month contract since August 2010.
The most-active May contract was also up 0.09 cent, or 0.5 percent, at 18.14 cents per lb.
Dealers cited oversupply and slow demand on the physical market, with buyers potentially waiting for a further fall in prices on the back of forecasts for a fourth straight global surplus in 2013/14.
"The problem we've got at the moment is that crops are growing well in most countries," a London-based broker said, noting that top producer Brazil as well as Thailand and India had fared better than expected.
"China also has huge stocks, and their own crop isn't that bad, so I don't think they're going to be a great importer this year," he added.
The volatile movement of the March/May spread <SB-1=R> has surprised some dealers, as it dropped to a discount of 0.26 cent after trading around a 0.30-cent premium last week.
"The weakness in the spread may indirectly provide support for the May (contract) but there is certainly psychological damage as traders wonder what has changed so quickly in the March dynamics," said Michael McDougall, a vice president with Newedge USA, in a daily report on Wednesday.
"We believe there could have been a fund or large trade spec position that was blown out."
McDougall added that the widening of the spread could mean "a good portion of the potential delivery will be rolled forward".
May white sugar on Liffe was up $5.30, or 1.0 percent, at $514.10 a tonne.
May cocoa futures on ICE settled up $6 at $2,131 per tonne. May cocoa on Liffe inched down 1 pound to finish at 1,426 pounds per tonne, above last week's 10-month low of 1,403 pounds per tonne.
"There were concerns about dryness ... and now with forecasts in the next week for some precipitation events, that kind of potential support has left," said Keith Flury, an analyst at Rabobank.
"This is all coupled with the hedging going on right now of the next main crop, all of which is relatively bearish, so it doesn't look like there's a lot of support in cocoa at the moment," he added.
Reforms designed to give Ivory Coast cocoa farmers better returns could turn sour as a sinking world market may force the world's top grower to cut its farm price, risking a political backlash and jeopardizing future supply.
Ghana's main crop cocoa purchases were down 16.8 percent by Feb. 14 since the season started on Oct. 12, data from industry regulator Cocobod showed.
Meanwhile, arabica coffee edged up from recent lows. Some concerns have emerged about crop quality and output in Colombia, the top high-quality coffee producer, where growers blocked roads and demanded more government aid.
"I think coffee is trying to put a bottom in here," said Jack Scoville, a vice president at Price Futures Group in Chicago.
"The differentials are stabilizing and firming up, at least in Central America."
ICE May arabica coffee inched down 0.15 cent, or 0.1 percent, to $1.4335 per lb, having dipped last week to $1.3760, the lowest for the second-month contract since June 2010.
May robusta coffee futures on Liffe settled up $12, or 0.6 percent, at $2,098 a tonne. ($1 = 0.6608 British pounds)
(Additional reporting by Sarah McFarlane in London; Editing by Dale Hudson, Jane Baird and Keiron Henderson)