SOFTS-ICE sugar dips to 3-1/2 year low on excess supplies
* Raw and white sugar futures both set new lows
* Strong port arrivals threaten cocoa bull run
(Adds quotes, updates prices)
LONDON, Dec 18 (Reuters) - Raw sugar futures on ICE fell to the lowest level in around 3-1/2 years on Wednesday as the market extended a prolonged slide driven by surplus supplies.
Prices have fallen by more than 50 percent since early 2011, depressed by rising global stocks following several seasons when production has outstripped demand.
"Fundamentally, there is significant supply pressure driving prices lower," Tracey Allen, a senior soft commodities analyst with Rabobank, said.
"Spec liquidation has been driven by fundamental oversupply in the market."
ICE March raw sugar futures dipped to 15.86 cents a lb, the weakest level for the front month since July 2010, before recovering to an unchanged 15.96 cents by 1224 GMT.
"The drivers of the sugar bear-market have not changed in recent weeks. That is, comfortable global supplies and anaemic demand provide no fundamental reason to lift bids," analyst Luke Mathews of Commonwealth Bank of Australia said.
March white sugar on Liffe fell $1.60 or 0.4 percent to $434.20 per tonne after earlier dipping to $432.50, the lowest level for the front month since May 2010.
Cocoa futures showed mixed trends with ICE March up $5 or 0.2 percent at $2,776 a tonne while sterling-denominated Liffe March off 7 pounds or 0.4 percent at 1,777 pounds a tonne.
"It is a currency adjustment (driving the divergent trends)," one dealer said, noting a significant strengthening in sterling against the dollar.
Dealers said there were keeping a close watch on port arrivals data from Ivory Coast with the current strong pace raising some doubts about the extent of an expected global deficit in the 2013/14 season.
Speculators have built huge long positions on both ICE and Liffe recently driven partly by an expected tightening in supplies as demand outpaces production.
"Unless you get a dramatic sharp tail off in January, I think the deficit starts to move lower then the spec position might look a bit vulnerable," one dealer said.
"They (specs) will have a difficult time justifying why they have a record long position," the dealer added.
Robusta coffee futures on Liffe were slightly lower as the market extended its pullback from last week's peak with March off $6, or 0.35 percent, at $1,711 a tonne.
The contract peaked at $1,813 on Friday, the highest level for the second month since late August, before the rally stalled, weighed partly by signs that the run-up in prices had led to a pick-up in selling from top grower Vietnam.
March arabica futures on ICE climbed 0.70 cent or 0.6 percent to $1.1485 per lb.
(Reporting by Nigel Hunt, editing by William Hardy)