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SOFTS-Sugar extends losses to 5-week low, cocoa treks higher
* Cocoa climbs further above 200-day moving averages
* Dealers see brisk Brazil H2 July sugarcane crush
* Arabica coffee futures prices seen rangebound near term (Updates prices)
By Marcy Nicholson and David Brough
NEW YORK/LONDON, Aug 7 (Reuters) - Raw sugar futures dropped for the sixth straight session and hit a five-week low on Tuesday, on improved crop weather in top producing nations as well as chart-based sell signals, while cocoa futures jumped to multi-month highs on short-covering.
Arabica coffee eased while holding its lackluster range, and robusta turned lower.
Benchmark October sugar futures on ICE tumbled 0.41 cent, or 1.9 percent, to finish at 21.42 cents a lb, the lowest settlement since July 2. Total volume was light at around 80,000, preliminary Thomson Reuters data showed.
Expectations of a big global sugar surplus, fueled by northern hemisphere harvests in coming months, reselling by Chinese importers and an increasingly weak chart all weighed on sugar futures prices.
"With the harvesting conditions improving in both the center-south of Brazil and Queensland, the substantial world surplus is now beginning to weigh on the market," one London-based broker said.
Dealers anticipated a brisk Brazilian cane crush number from cane growers' group Unica later this week.
"The Unica report is expected to show a substantial improvement in the pace of the harvest given better weather conditions in the second half of July," said Nick Penney of brokerage Sucden Financial.
Brazil's center-south sugar cane mills should not have to leave any of the 2012/2013 crop in the fields for processing next season, the head of the country's largest sugar exporter Cosan said on Monday.
"The aggressive sellers in China are reselling so they've kind of capped the market," said Michael McDougall,
Chinese traders are reselling sugar cargoes on the international market as a better-than-expected domestic crop and the end of a government buying program cut the need for imports of the sweetener, industry sources said.
Technically, the chart is weak, having dropped for six straight sessions, falling below 22.20 cents, basis October, last week to confirm what some view as a head-and-shoulders formation, as well as closing below the 100-day moving average on Monday.
October white sugar futures on Liffe dropped $9.50, or 1.6 percent, to end at $598.20 a tonne, after falling to a four-week low at $596.90. The contract found support just below the 200-day moving average at $597.30.
Cocoa futures touched multi-month highs, underpinned by dry weather in West Africa and worries over the potential impact of the El Nino weather phenomenon on production later in the year. Both London and New York markets were also gaining strength technically, having recently soared above the 200-day moving averages, ICE futures finding additional support from the strong sterling against the U.S. dollar, dealers said.
Traders also monitored reports of violence in top producer Ivory Coast, where gunmen killed five soldiers and seized weapons in a pre-dawn raid on an army camp in Ivory Coast's commercial capital Abidjan on Monday, military officials said. This heightened fears of renewed instability in the world's top cocoa-growing country.
"The fundamentals of cocoa are crop development," one London-based dealer said. "This (violence) is a sideshow."
London December cocoa gained 28 pounds, or 1.7 percent, to settle at 1,658 pounds per tonne, having earlier touched a 9-month high, basis second month, of 1,660 pounds.
ICE December cocoa futures jumped $41, or 1.7 percent, to end at $2,450 a tonne, after earlier touching a 5-1/2-month high, basis second position, of $2,457. Total volume was heavy and reached nearly 39,000 lots, the highest since July 12, preliminary Thomson Reuters data and ICE data showed.
Short-covering of the ICE cocoa September/December spread gave a boost to volume, as dealers covered their shorts and the spread narrowed to close at a $3 discount, from $11 the previous day.
"I think there's a little bit of nervousness on the September position which is underpinning the market," said Drew Geraghty, commodity broker with ICAP North America in New Jersey.
In the coffee market, September arabicas on ICE dropped 2.85 cents, or 1.6 percent, to close at $1.7265 per lb. Total volume was heavy and exceeded 34,000 lots, the highest in a month.
Favorable harvesting weather in Brazil weighed on arabicas, dealers said, anticipating prices would move mostly sideways in the near term.
November robusta coffee futures closed down $21, or 1 percent, at $2,194 a tonne.
Vietnam, the world's largest producer of robusta coffee, is forecast to export between 70,000 and 100,000 tonnes, or 1.17 million to 1.67 million bags, of beans in August, down from the 110,000 tonnes loaded last month, traders said. (Editing by William Hardy and Mike Nesbit; Editing by David Gregorio)
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