SOFTS-Cocoa futures slide, meeting technical resistance, sugar up
* Recent ICE cocoa rally causes producer, speculator selling
Penalty changes on ICE Futures U.S. push dealers out of May contract
* Liffe robusta coffee futures post largest daily loss since early January
(New throughout, updates closing prices; adds byline, New York dateline)
By Chris Prentice and Sarah McFarlane
NEW YORK/LONDON, March 14 (Reuters) - ICE cocoa futures fell on Thursday in heavy trading, as speculators and commercial dealers sought to sell the most-active contract ahead of penalty changes on ICE Futures U.S., a day after a short-covering rally ran into technical resistance.
Coffee futures declined, while sugar futures gained.
Cocoa futures ran into technical resistance on Wednesday at about $2,176 per tonne. The slide extended on Thursday, and trading volumes picked up as speculators and commercial dealers sought to get out of the May contract and avoid penalties expected to be implemented with the July contract.
"It's more bearish the (May/July) spread than the actual price," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors.
May cocoa on ICE fell $17, or 0.8 percent, to settle at $2,130 a tonne. The July contract fell $15 to settle at $2,143.
The May-July contract spread widened by $2 to $13 a tonne.
ICE cocoa futures are up more than 5 percent from a nine-month low reached last week when ample supplies pressured prices.
"Over the last few days, cocoa was undergoing a short-covering rally and now we're giving that back. You're seeing people come in and sell, not only on the producer side, but some speculators as well," said Jack Scoville, vice president for the Futures Group in Chicago.
Dealers and analysts said an expected late start to West Africa's 2012/13 April-September mid crop should not cause any issues for the well-supplied market.
July cocoa on Liffe closed down 20 pounds, or 1.4 percent, at 1,441 pounds per tonne.
The recent bounce in prices was thought to have triggered forward sales from origins.
"Ghana's been in the market in the past two sessions but it's been well absorbed," said the analyst.
A total of 72,350 tonnes of cocoa was delivered against NYSE Liffe's March contract, exchange data showed on Thursday.
Trading volumes were heavy, at more than 34,000 lots, about 42 percent above the 30-day average, preliminary Thomson Reuters data showed.
COFFEE, SUGAR VOLATILE
May robusta coffee futures on Liffe closed down $40, or 1.8 percent, at $2,163 a tonne, after hitting $2,216 during the previous session, the highest level for the benchmark second month since October 2012.
Concern over dry conditions had pushed robusta to the five-month high.
Thursday's loss marked the May contract's largest decline since early January.
Dealers said talk of rain in top robusta producer Vietnam had quelled fears of drought curbing 2013/14 output and triggered some producer selling.
ICE May arabica coffee slid 0.95 cent, or 0.7 percent, to close at $1.3965 per lb, erasing earlier gains.
Hefty supplies continued to pressure prices and futures gravitated toward technical support of $1.40 a lb. ICE arabica futures reached a 32-month low of $1.3760 per pound on Feb. 19.
Brazil is expected to begin harvesting a record off-year crop.
May raw sugar futures gained 0.04 cent, or 0.2 percent, to settle at 18.84 cents a lb.
Prices were supported by talk of physical offtake, anticipated ethanol tax cuts and rising logistical costs to sugar exports in top producer Brazil supporting prices, dealers said.
Raw sugar premiums have grown steeper in parts of Brazil thanks to logistics delays, creating concern over near-term shipments of sugar from the world's top producer.
Dealers have said that government efforts to guide more sugar into ethanol production could help reduce a large global glut of sweetener, but the exact amount remains to be seen.
Raw sugar prices were mixed throughout the day, with expectations of hefty global surpluses and some producer-selling capping gains.
May white sugar on Liffe was up $3.30, or 0.6 percent, to finish at $537.20 a tonne.
(Reporting by Sarah McFarlane; Editing by Catherine Evans and David Gregorio)