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SOFTS-Cocoa hits 2-1/2-year highs over potential El Nino, sugar soars

* Potential El Nino weather pattern could curb cocoa output

* Liffe white sugar soars ahead of contract expiry

* India sets sugar support at 3,333 rupees/tonne

(Adds closing coffee, sugar prices; adds Brazil weather forecasts)

NEW YORK/LONDON, Feb 12 (Reuters) - Cocoa futures in New York and London hit 2-1/2-year highs on Wednesday on worries that potential El Nino weather conditions could curb global cocoa output, while ICE raw sugar rallied the most in almost two weeks on short-covering.

Arabica coffee on ICE Futures U.S. surged in heavy spreading and options-related trade, as traders worried that dry conditions in top grower Brazil had hurt yields.

The May cocoa contract on Liffe closed up 13 pounds, or 0.7 percent, at 1,867 pounds a tonne after hitting 1,871 pounds, a May contract high and the strongest level for the second-month since September 2011.

May cocoa on ICE gained $43, or 1.3 percent, to settle at $2,971 a tonne, after hitting a 2-1/2-year high of $2,974.

Dealers said the market was supported by a possibility that El Nino weather could affect future supplies for a market already expected to see a second straight deficit this year. El Nino can cause flooding and heavy rains in the United States and South America and drought in Southeast Asia and Australia.

"During El Nino years, global production is lower than it would otherwise be," said Jonathan Parkman, joint head of agriculture at brokerage Marex Spectron, who said the emergence of the weather pattern early this spring could affect both the current 2013/14 crop and the following.

Earlier this month, both the Australian weather bureau and the U .S. weather forecaster Climate Prediction Center (CPC) said there was an increasing chance of an El Nino weather pattern emerging later this year.

Analysts say El Nino's effect on cocoa producing countries varies on each occasion but the overall impact is negative.

SUGAR TRADERS SELL RUMOR, BUY FACT

ICE March raw sugar futures rallied 0.35 cent, or 2.3 percent, to finish at 15.81 cents per lb, its sharpest daily gain this month, after India's government agreed to give millers a subsidy for raw sugar production.

The 3,333 rupee-per-tonne ($53.52-per-tonne) subsidy will likely boost exports from India, and expectations of it pressured prices to a 3-1/2-year low of 14.70 cents at the end of January, traders said.

Even so, prices rallied on short covering after the news has been widely anticipated by the market.

Short-covering following the news was a case of "sell the rumor, buy the fact," said Michael McDougall, a senior vice president for Newedge USA in New York.

Dryness is still a concern for Brazil's key sugar region, private forecaster MDA Weather Services said in a daily report.

March white sugar futures on Liffe soared $14.80, or 3.4 percent, to settle at $453.60 per tonne in dealings ahead of Thursday's expiry.

The spot contract's premium above the second month <LSU-1=R> spiked as high as $8.80 a tonne, its highest since October, after largely trading at a discount for the past four months.

Traders expect a moderate delivery of Brazilian and Central American supplies against the March contract.

Cane crushing in the world's top producer wound down last month, leaving Brazil's main center-south region cumulative sugar output for the season largely unchanged at 34.3 million tonnes at the end of January, biweekly data from cane industry association Unica showed on Wednesday.

May arabica coffee futures on ICE jumped 3.7 cents, or 2.7 percent, to close at $1.4315 per lb.

Traders were covering short positions ahead of the options expiry, said Hector Galvan, senior softs broker at RJO Futures in Chicago.

Prices also found support in by worry that dry conditions in Brazil have hurt crops. MDA Weather Services said on Wednesday that dryness remains a "major concern" in coffee regions.

Short-covering on the worries shot the second-month to last week's nine-month high of $1.4610 per lb.

Liffe May robusta coffee gained $8, or 0.4 percent, to settle at $1,818 a tonne.

(Editing by Marguerita Choy and Grant McCool)