Coffee dives to 7-year low on heavy supply outlook
* Colombia October coffee output at 6-year high
* ICE sugar hits 5-week low
* Sugar traders add to net longs for 6th straight week
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LONDON, Nov 7 (Reuters) - Coffee futures prices sank to a 7-year low on Thursday with the potential for a huge crop in Brazil next year increasing concern about excess supplies.
The market has been falling for more than two years with large crops in Brazil and a rebound in production in Colombia driving prices down from a peak of more than $3 per lb in May 2011 to a low on Thursday of barely more than $1.
"I'm struggling to see what can support this market. It's fundamentally bearish," said Macquarie analyst Kona Haque.
"There's a big supply overhang going into Brazil's on-crop next year and Colombia is recovering."
Weather has been generally favourable for next year's Brazil harvest, which will begin in May, and when some analysts believe production could reach a record 60 million bags.
The upcoming crop is an "on" year in the country's biennial cycle which sees production rise and fall from one year to the next as trees need time to recover after bearing large quantities of cherries.
Colombia's coffee output in October was 1.06 million 60-kg bags, the highest for the month since 2007, as the world's biggest fine arabica producer recovers from a roya fungus epidemic and the widespread replacement of trees designed to combat it. ID:nL2N0IR2BU 3/8
December arabica coffee futures on ICE were up 0.30 cent or 0.3 percent to $1.0180 per lb by 1314 GMT, but earlier tumbled to $1.0095, the lowest since October 2006.
Liffe January robusta coffee was down $14 or 1 percent at $1,440 a tonne, weighed by a strong crop in Vietnam, the largest producer of robusta beans.
Vietnamese farmers have harvested on average 20 percent of the new 2013/2014 coffee crop in the Central Highlands, traders said, indicating ample bean supply.
ICE March cocoa was down $13, or 0.5 percent, at $2,730 a tonne, consolidating down from Tuesday's sharp rise as the Ivory Coast harvest accelerates, although firm demand limited losses.
"We're in harvest pressure now," Haque said.
"But even then, cocoa's performance has been amazing considering we are in a harvest period, so what that shows is that demand is still very strong."
March cocoa on Liffe stood 4 pounds or 0.2 percent lower at 1,731 pounds a tonne.
ICE March raw sugar futures lost 0.14 cent or 0.8 percent at 17.96 cents a lb, after hitting a five-week low of 17.93 earlier in the session.
U.S. data showed on Wednesday that speculators increased their net long position in the week ended Oct. 29.
"The figure was probably higher than a lot of people were talking," a trader said, adding that the funds seemed overly long, presenting some difficult decisions for managers.
"I think the funds are left with a choice: are we going to sit this out and hope that it will bounce, or are we going to cut our losses and go from there?"
The trader said the latter option was more likely if Thursday's session closed beneath 18 cents.
December white sugar on Liffe was off $2.80, or 0.6 percent, at $477.20 a tonne.
(Editing by William Hardy)