SOFTS-Coffee falls from 2-yr high on rain forecast; sugar drops

* Sugar trade focused on next Tuesday's white sugar expiry

* Guatemalan, Mexican sugar seen likely in delivery tonnage

* N.American cocoa grind data to be released April 17

(New throughout, updates prices; adds trade comment, second byline, NEW YORK dateline)

NEW YORK/LONDON, April 11 (Reuters) - Arabica coffee futures on ICE turned lower for the first time in seven sessions on Friday, on forecasts for rain in top grower Brazil, but remained on track for their strongest weekly performance in seven weeks after surging to two-year highs.

London white sugar futures on Liffe dropped more than 5 percent ahead of Tuesday's May contract expiry, which is expected to feature Guatemalan and Mexican supplies delivered to the tape. Raw sugar on ICE Futures U.S. also fell, as a cyclone struck land in Australia just north of cane areas, reducing potential to damage.

Cocoa futures on rose in rangebound dealings.

Arabica coffee prices hit their highest level since February 2012, after a small town in Brazil's biggest coffee-growing state declared a state of emergency because of the impact from a January-February drought, and an analyst said very little of the country's 2014 crop has been sold since February.

Most-active ICE July arabica coffee futures were down 2.10 cents, or 1 percent, at $2.0630 cents per lb by 12:08 p.m. EDT (1608 GMT), after peaking at $2.1090 earlier in the session, the highest for the second position since February 2012.

The contract was on track to close the week up 10 percent, its biggest surge in seven weeks. July arabica coffee got off to a strong start for the week after Brazil's national coffee council (CNC) estimated this year's output will fall as low as 40.1 million bags.

The market turned lower on forecasts for much needed rain in Brazil's coffee belt, though it's uncertain how much this will curb further losses from the drought as precipitation remained below normal.

"Short term, we expect potential for modest gains around $2.10, while a break above this level opens up potential for gains towards the $2.15 area," said Myrto Sokou, senior analyst at Sucden Financial, referring to the second-month contract.

Arabica May options will expire at the end of the day with heavy open interest at $2.00, $2.05 and $2.10, helping to keep the futures market within this range.

July robusta coffee futures on Liffe eased $16, or 0.7 percent, to $2,142 per tonne.

In sugar, front-month Liffe May white sugar futures sank $10.00, or 2.2 percent, to $438.90 a tonne. For the week, it was on track to fall 5.4 percent, its weakest performance since October 2012.

Dealers said they expected Guatemalan white sugar and possibly Mexican supplies to feature in the delivery at expiry of the Liffe May contract on April 15.

"There is talk that Mexicans and Centrals could be delivered," said Jonathan Kingsman, director, agriculture at data provider Platts.

Nick Penney, a senior trader with Sucden, said a widening May/August spread signaled the delivery tonnage may be smaller than anticipated as positions were rolled forward into August.

"The threat of the delivery is what has become the driving force in this market," he said.

Front-month raw sugar futures on ICE fell 0.21 cent, or 1.2 percent, to 16.87 cents a lb. The market ignored the strongest cyclone to hit Australia in three years as it made landfall farther north than expected, reducing sugarcane damage potential, a meteorologist and a trader said.

Still, sugar farmers in Queensland, who grow about 95 percent of the sweetener produced in Australia, were bracing for potential damage to up to 7 million tonnes of cane, industry groups said.

It was the seventh straight session of rangebound trade as worries over lower output in top grower Brazil were offset by weak demand due to high inventories.

Cocoa prices rose in a technical correction after weakening on Thursday when data showed European cocoa grindings had risen 0.4 percent in the first quarter, compared with the same period last year, below traders' expectations for a gain of around 3 percent.

July cocoa futures on ICE ended up $14, or 0.7 percent, at $2,999 a tonne, while Liffe July cocoa futures settled up 15 pounds, or 0.8 percent, at 1,884 pounds.

North American cocoa grind data is scheduled for release post-market April 17, with estimates ranging from flat to up 2 percent versus the first quarter of 2013.

(Editing by Jane Baird, David Evans and Jan Paschal)