SOFTS-ICE arabica coffee, raw sugar rally on Brazil weather forecasts
* Arabica coffee futures surge to highest since May
* Short-covering on lower Ivory Coast output forecast -trade
* N.American Q2 cocoa grind data due on Thursday
(New throughout, updates prices; adds byline, NEW YORK dateline)
NEW YORK/LONDON, July 18 (Reuters) - ICE arabica coffee surged to an almost two-month high on Thursday and was on track for its biggest weekly gain in 10 months as ICE raw sugar climbed the most in over two weeks on cold weather and rain forecasts for top producer Brazil.
ICE cocoa rose, heading for its fourth weekly gain, as expectations of lower production in Ivory Coast spurred short covering.
ICE September arabicas were up 3.00 cents, or 2.3 percent, at $1.3095 per lb by 12:35 p.m. EDT (1635 GMT), having earlier surging to $1.3400, the strongest level since late May.
Prices were headed toward its largest weekly gain since September as the second-month contract rose further from a four-year low of 1.1710 cents a lb hit on June 20 amid expectations of huge Brazilian output.
Weather forecaster Brazil-based Somar said that cold weather could cause freezing damage to coffee crops and World Weather Inc said cold weather may produce frost and freezes in areas of Brazil, adding fuel to a rally that began earlier this week amid a frost forecast from MDA Weather Services.
"Coffee is up because of the potential frost," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors.
"If you're a spec, you don't want to stand in the way of that," he said, referring to a net short position held by speculators in arabica coffee futures and options.
Liffe September robusta coffee was up $29, or 1.5 percent, at $1,979 a tonne.
Premiums for Indonesian robusta fell to their weakest level since April on Thursday after farmers increased deliveries to raise cash ahead of a Muslim festival, spurring buying by local roasters.
RAW SUGAR RALLIES
October raw sugar on ICE was up 0.22 cent, or 1.4 percent, at 16.30 cents per lb, headed for the largest one-day gain since July 1 amid worries that rain could damage Brazil's crop.
"Heavy rain that precedes the cold early next week will delay harvesting, with Parana and southern Sao Paulo wettest," said World Weather senior agricultural meteorologist Drew Lerner, though he noted that cool weather following the rains should leave the crop in favorable condition.
Technically-driven dealings added to the gains, dealers said.
"We're seeing a technical bounce because we held the 16 (cent) level," said Boyd Cruel, softs analyst for Vision Financial Markets in Chicago, describing 16 cents as a key psychological level.
The front month touched a three-year low of 15.93 cents set on Tuesday, as expectations of ample output from Brazil weighed.
Liffe October white sugar was up $6.30 or 1.4 percent, at $466.00 a tonne.
September cocoa futures on ICE were up $47, or 2 percent, to settle at $2,347 a tonne. The contract was headed for a weekly gain of about 5 percent, the largest since early June and its fourth straight up week.
Ivory Coast, the world's top cocoa grower, expects production to fall 1.4 million tonnes in the 2013/14 season, from over 1.5 million tonnes this season.
The report spurred short covering, adding to gains seen this week on news that the top producer had already forward sold a large portion of its 2013/14 crop and Asian second-quarter grind data from the Cocoa Association of Asia that showed a 2 percent rise from the same period last year.
September cocoa in London closed up 23 pounds, or 1.5 percent, at 1,608 pounds a tonne, after touching 1,610 pounds, the highest price since December.
North American second-quarter grind data will be released on Thursday around 4 p.m. EDT, with analysts expecting a rise of 2 to 5 percent year-over-year.
(Editing by Marguerita Choy)