SOFTS-Cocoa gains, bucking commodities slump on technical buying
* ICE cocoa futures rise, test resistance level of $2,176
* Cocoa's upside potential seen limited by ample W. Africa mid crops
* ICE arabica futures open interest at highest levels since July 2010 (New throughout, updates with closing prices; adds byline, NEW YORK to dateline)
By Chris Prentice and David Brough
NEW YORK/LONDON, March 21 (Reuters) - Cocoa futures and arabica futures on ICE gained on Thursday as dips inspired buying, overcoming pressure from ongoing concern over euro zone stability and expectations of ample supplies.
ICE sugar prices slid, hovering near technical support levels.
The Thomson Reuters Jefferies CRB Index declined and global markets remained rattled on Thursday as the Cypriot debt crisis and economic data pointed to a deepening of the economic downturn in Europe.
Cocoa bucked the downtrend throughout the session, rising for a third straight day and gravitating toward recent highs, after sinking as low as a technical support level of $2,075 per tonne earlier this week.
The most-active May cocoa contract on ICE Futures U.S. settled up $14, or 0.7 percent, at $2,166 a tonne. Earlier, the contract rose as high as $2,186 a tonne.
"We pulled back earlier this week, hit some support and bounced up. Now we're retesting those highs," Boyd Cruel, a softs analyst for Vision Financial Markets in Chicago said, noting cocoa was pushing toward highs established earlier this month around the $2,176 level.
Buying came in on cocoa's dips to lower levels on Thursday.
"We've seen a bit of short covering from trade and small specs," a London-based cocoa futures dealer said.
Upside potential was seen as limited, due to ample mid crops in West Africa that have exceeded some expectations, dealers said.
Liffe July cocoa futures rose 9 pounds, or 0.6 percent, to settle at 1,455 pounds a tonne.
COFFEE INCHES UP, SUGAR DOWN
ICE May arabica futures settled up 0.15 cent, or 0.1 percent, at $1.3375 per lb, reversing the session's earlier losses.
The earlier losses inspired limited trade buying before the market settlement, said Jack Scoville, vice president for Price Futures Group in Chicago.
Coffee has gained for the past two sessions, after posting a string of seven daily losses. The most-active May contract moved into oversold territory, with a 14-day relative strength index below 20, on Friday.
Prices reached a contract low of $1.3205 a lb on Wednesday.
"We're trying to find a little support to counterbalance expectations of a huge supply out of Brazil and some of the fears over Cyprus are continuing to lend pressure," said Adam Tuiaana, a senior commodities broker for RJO Futures in Chicago.
ICE arabica prices have been weighed by expectations of ample supplies from top producer Brazil and a growing bearish stance held by speculators.
Open interest totaled more than 174,000 contracts during each of the two previous sessions, the highest levels since July 2010, according to ICE data.
May robusta coffee futures on Liffe inched up $1, or 0.05 percent, to settle at $2,153 a tonne.
Prices reached a five-month high of $2,216 last week on concerns over production in top producer Vietnam following a recent dry spell. Those gains have been pared as forecasts of rain have eased supply concerns for the 2013/14 crop.
May raw sugar futures fell 0.14 cent, or 0.8 percent, to close at 18.21 cents a lb.
The market has been consolidating over the past three sessions after falling more than 3 percent on Monday amid the Cypriot banking crisis and a larger-than-expected dialing back of net short position held by speculators.
The steep reduction in their bearish stance in raw sugar futures and options had made prices less susceptible to short-covering rallies, traders said.
Prices have been gravitating to a technical floor in the range of 18.20 cents to 18.25 cents after failing to close above 19 cents last Friday, Vision Financial Markets' Cruel said.
Expectations of abundant sugar supplies from the 2013/14 crop in the center-south of Brazil and other leading producers, such as Thailand, Mexico and the United States, pushed prices to the lowest level in 2-1/2 years last month.
Traders and analysts have cited risks of export delays from Brazil due to competition for transport from huge grains and oilseeds harvests, though how much those risks could support sugar prices has been seen as limited, due to the length of the export season and limited demand.
May white sugar on Liffe dropped $2.20, or 0.4 percent, to finish at $528.40 a tonne.
The European Union is on course to complete reforming its 55 billion-euro-a-year farm policy from the start of 2014, after EU governments agreed to a joint negotiating position late on Tuesday. (Reporting by David Brough; Editing by Anthony Barker and Maureen Bavdek)