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SOFTS-ICE sugar near 2-1/2 year low, coffee steady

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Published: Thursday, 28 Feb 2013 | 8:00 AM ET
By: Sarah McFarlane and Natalie Huet

* Brazilian sugar exports brisk

* Technical resistance seen at $1.4460 on May arabica

(Adds detail, quotes, updates prices)

LONDON, Feb 28 (Reuters) - ICE raw sugar futures edged above a 2-1/2 year low on Thursday, as surplus supplies capped gains, while coffee and cocoa were steady.

Dealers said lower sugar prices were helping uncover demand on the physical market.

"Brazilian export figures were a record in the fourth quarter versus the same period in previous years and are going to be a record in the first quarter. This shows current prices are continuing to stimulate strong demand," said Peter de Klerk, analyst at Czarnikow.

Brazil exported 1.73 million tonnes of raw sugar and 567,100 tonnes of white sugar in January.

The most active May raw sugar futures was up 0.12 cent, or 0.7 percent at 18.20 cents per lb at 1240 GMT.

The front-month contract dipped to 17.75 cents a lb on Wednesday, the lowest level since August 2010, as expectations for the fourth consecutive surplus in 2013/14 weighed.

Producer selling above the market was expected to limit any moves to the upside, with dealers noting potential interest above the 18.50 cent level.

Dealers said a small delivery was expected against the March raw sugar contract, due to expire on Thursday.

May white sugar on Liffe rose $4.50 or 0.9 percent to $517.90 a tonne.

BUMPER BRAZIL CROP

In arabica coffee, dealers said another bumper harvest from Brazil expected in the coming months was limiting price upside potential.

"There's still a lot of arabica around, Brazil is still sitting on a lot," said a London-based broker.

ICE May arabica coffee rose 0.05 cent or 0.03 percent to $1.4350 per lb.

"It's... looking a little bit like New York is trying to wind up and maybe test higher, but I think we need to break around $1.4460 (for May) to really cement that," said the broker.

New York May coffee may rebound to $1.4640 per lb, as this rebound seems to be against the fall from the Jan. 18 high of $1.6060 to a low at $1.3760, according to Reuters market analyst Wang Tao.

May robusta coffee futures on Liffe rose $7 or 0.3 percent, to $2,105 a tonne.

Indonesian robustas fetched smaller premiums this week with more beans expected to arrive from plantations, while worries about dry weather pushed up the price of Vietnamese coffee, dealers said on Thursday.

Cocoa prices were under pressure from lagging origin sales, and with industry already well covered, dealers said it was difficult to see a sustained rise in prices in the short-term.

May cocoa on Liffe fell 1 pound or 0.07 percent to 1,425 pounds a tonne.

"We're hearing origin have been unable to sell into the market because trade are not willing to pay up at the levels they are looking for, and trade appear to be in no desperate rush to buy," said Justin Grandison, head of cocoa brokerage at ABN Amro Markets.

"The same can be said for industry who have healthy fixed forward cover."

May cocoa futures on ICE were up $4 or 0.2 percent at $2,135 per tonne.

(Reporting by Sarah McFarlane; Editing by Alison Birrane)

 Print
*Technical resistance seen at $1.4460 on May arabica. Brazil exported 1.73 million tonnes of raw sugar and 567,100 tonnes of white sugar in January. The most active May raw sugar futures was up 0.12 cent, or 0.7 percent at 18.20 cents per lb at 1240 GMT.

   
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