SOFTS-Cocoa futures rise, ICE arabica coffee gains as shorts cover
* Dry weather in West Africa fuels buying in cocoa market
* Arabica coffee recovers on crop concerns in Brazil
* Producer selling helps stall advance in sugar prices
(Updates with closing coffee, sugar prices)
NEW YORK/LONDON, Aug 14 (Reuters) - ICE cocoa futures posted their biggest gains in a week on Wednesday on concern over dry weather in top grower Ivory Coast, and ICE arabica coffee gained on short-covering and expected crop losses due to frost in Brazil, the world's top producer.
ICE raw sugar was unchanged, consolidating near a seven-week high touched during the previous session.
The December cocoa contract on ICE Futures U.S. finished up $37, or 1.5 percent, at $2,495 a tonne.
December cocoa in London closed up 17 pounds, or 1 percent, at 1,655 pounds a tonne. The contract peaked at 1,671 pounds last week, the highest level for the second month since September 2012.
Prices have jumped about 8 percent on ICE and nearly 6 percent on Liffe this month. Worries over dry weather in Ivory Coast have driven buying in recent sessions.
"We won't know until the harvest what the impact is, but the weather is providing underlying support. Pullbacks are finding technical support," said Boyd Cruel, softs analyst for Vision Financial Markets in Chicago.
Speculator buying has driven recent gains. Dealers said large speculative net long positions in cocoa left the market susceptible to a substantial fall if the dry weather concerns prove to be overstated.
Reports on positions in both Liffe and ICE cocoa in the last few days have shown speculators increasing already large net long positions.
Dealers said origin selling from both Ivory Coast and Ghana helped keep a lid on prices.
"Ivory Coast and Ghana have been selling, and I think they will continue. It is a very good price for them," one London dealer said.
COFFEE RECOUPS LOSSES
December arabica coffee futures on ICE rose sharply before paring gains to close up 2.30 cents, or 1.9 percent, at $1.2530 per lb, recovering much of the loss from Tuesday when it fell more than 3 cents.
Brazil's Parana state said on Wednesday that 62 percent of its coffee crop for harvest next year would be lost due to frost that hit in late July. That would mean a loss of about 1 million 60-kg bags.
That represents only a small part of Brazil's total output, but it helped drive short-covering, dealers said.
"Coffee took a pretty good beating (yesterday) and the Parana production loss is providing support here," said Sterling Smith, a futures specialist with Citigroup in Chicago.
Dealers continued to eye cold weather in Brazil, where huge output has recently pressured prices to four-year lows.
Robusta coffee futures on Liffe also finished higher, with November up $18, or 0.9 percent, at $1,926 a tonne.
"There's a little bit of industry buying around. Roasters are buying second quarter next year," one dealer said.
Raw sugar futures on ICE were little changed as the market's recent run-up lost momentum.
Dealers continued to keep a close watch on the weather in top producer Brazil, with Parana facing the potential for frost later this week before temperatures begin to climb. No significant damage to the cane crop is expected, however, at this stage.
October raw sugar on ICE settled unchanged at 17.25 cents a lb. Gains made on short covering were capped by producer selling, dealers said.
The contract climbed to a peak of 17.29 cents on Tuesday, the highest level for the front month since June 25 and up more than 8 percent from a three-year low of 15.93 cents in mid-July.
"I think some of the producers are selling at this price level," said Jonathan Kingsman, head of agriculture at data provider Platts.
October white sugar on Liffe edged up $1.10, or 0.2 percent, to settle at $504.30 a tonne.
(Additional reporting by Silvia Antonioli and Sarah McFarlane; Editing by Jason Neely, Jane Baird and John Wallace)