(Rewrites throughout, updates prices; adds comment, NEW YORK dateline)
NEW YORK/LONDON, March 5 (Reuters) - New York cocoa futures rallied more than 6 percent to a 16-month high on Monday, on a firm British pound and heavy fund buying, extending the U.S. market's rare premium over London and reaching the most technically overbought levels in 10 years.
* May New York cocoa settled up $133, or 5.8 percent, at $2,446 per tonne, after rising 6.3 percent to $2,459 a tonne, the highest for the second position since November 2016.
* May volume reached 45,722 lots, a contract high.
* The rally lifted the second-position contract above 82 on the relative strength index (RSI), the most technically overbought since July 2008.
* Its premium over London rose to around $81, up sharply from roughly $48 on Friday.
* "The funds are short New York and they're long London," said one U.S. trader, pointing to both short-covering and new longs on the New York market.
"I think the funds are piling in more in New York than they are in London, and it's affecting the arbitrage," the trader said.
* Speculators raised their net long position in cocoa to a 1-1/2-year high in the week to Feb. 27, exchange data showed Friday.
* Sentiment was also boosted by signs that top grower Ivory Coast is on course to produce less cocoa than previously expected, though traders said this was believed to have been worked into the market.
* "Physical differentials are very high, so there's obviously a scramble for cocoa," said one dealer.
* Bean arrivals to Ivory Coast ports between Feb. 26 and March 4 were half that during the same week last season.
May London cocoa settled up 67 pounds, or 4.1 percent, at 1,708 pounds per tonne, after surging to 1,717 pounds, its highest since March 2017.
* It rose above 86 on the RSI, a 10-year high.
* May arabica coffee settled down 1.1 cents, or 0.9 percent, at $1.211 per lb.
* Chart-based selling pressured prices below the $1.21 support level, traders said, as arabica futures bucked the session's higher trend in larger commodity markets.
A Rabobank coffee crop survey pegged top grower Brazil's 2018/19 output at 56.8 million 60-kg bags, down from a prior estimate of 59 million bags.
* May robusta coffee settled up $4, or 0.2 percent, at $1,755 per tonne.
* May raw sugar settled up 0.14 cent, or 1 percent, at 13.56 cents per lb.
* May white sugar settled up $3.90, or 1.1 percent, at $367.10 per tonne. (Reporting by Marcy Nicholson in New York and Ana Ionova in London Editing by Susan Fenton and James Dalgleish)