SOFTS-ICE arabicas higher after early drop, sugar firms
* Big supply, short selling send arabica to near 4-year low
* Commerzbank sees sugar at 18 cents in 4th quarter
* Liffe cocoa stuck inside tight range (Updates closing coffee/sugar prices)
By Marcy Nicholson and Sarah McFarlane
NEW YORK/LONDON, Sept 3 (Reuters) - ICE arabica coffee futures turned higher after nearing a four-year low on Tuesday, finding spill-over support in the firm commodity complex, but surplus supplies were expected to limit gains.
Raw sugar on ICE Futures U.S. was firm but pared earlier gains, while cocoa markets turned lower in sideways dealings as the British pound fell from a one-week high, pressuring the dollar-traded U.S. market.
ICE Futures U.S. agricultural markets were closed on Monday for the U.S. Labor Day holiday.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, was up about 0.4 percent, after paring steeper gains, as oil futures rose on concern about any wider conflict in the Middle East.
December arabica coffee futures on ICE rose 0.90 cent, or 0.8 percent, to finish at $1.1720 per lb, after falling to a session low at $1.1620. That was just above Friday's four-year low at $1.1610. The market has been pressured by a huge off-year crop in top grower Brazil.
Dealers said market fundamentals remained bearish in the near term due to pressures from ample coffee supply. Post-market on Friday, the U.S. Commodity Futures Trading Commission (CFTC) reported that speculators increased their net short position to a seven-week high, attracting new short selling earlier in Tuesday's session as it showed speculators still expect the market to go lower, dealers said.
"There is no real scarcity in arabica, and that is why prices are low and we think they will stay low," Commerzbank analyst Michaela Kuhl said.
Liffe November robusta coffee climbed $27, or 1.5 percent, to close at $1,785 a tonne.
ICE October raw sugar futures rose 0.13 cent, or 0.8 percent, to finish at 16.47 cents a lb, with some dealers viewing the market as oversold after Friday's CFTC data showed speculators boosted their net short position by nearly 70 percent in the week that ended Aug. 27. This attracted some buying, dealers said.
Total open interest jumped by nearly 5,000 lots to 926,879 lots on Aug. 30, the highest since June 14, ICE data showed.
The global raw sugar market has been trading at near three-year lows, pressured by a huge global surplus. ICE front-month raw sugar futures touched a three-year low of 15.93 cents a lb on July 16.
"The surplus in 2013/14 is supposed to be smaller than this year's, but quite recently the International Sugar Organization has been raising its surplus forecast for the coming season, so I don't really see any change in sentiment," Commerzbank's Kuhl said.
Commerzbank forecast benchmark raw sugar futures would rise to around 18 cents on average in the fourth quarter.
October white sugar on Liffe ended up $1.20, or 0.3 percent, at $479.00 a tonne.
In cocoa, December futures in London settled down 6 pounds, or 0.4 percent, at 1,613 pounds a tonne, below an 11-month high of 1,673 pounds touched on Aug. 20. The weak sterling against the U.S. dollar weighed on the market.
The December contract has traded inside a tight range of around 60 pounds for more than three weeks.
ICE December cocoa closed down $18, or 0.7 percent, at $2,418 per tonne.
($1 = 0.6425 British pounds) (Additional reporting by David Brough in London; Editing by Bob Burgdorfer and Maureen Bavdek)
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