* Brazil coffee crop worries after 6 weeks of hot, dry
* Robustas rally, raw sugar hits 7-week peak
* Macquarie forecasts 1 mln tonne 2014/15 sugar surplus
(New throughout, updates prices; adds byline, NEW YORK
By Chris Prentice and David Brough
NEW YORK/LONDON, Feb 19 ICE arabica coffee
prices catapulted to 16-month highs on Wednesday, extending the
previous day's huge gains as investors piled into the market
driven by worry over possible drought damage to crops in top
grower Brazil and by bullish chart signals.
The recent bout of dry weather in Brazil also lifted raw
sugar on ICE Futures U.S. to a seven-week high as expectations
grew that output in the world's top producer will be cut which
would cut into a global supply glut.
New York cocoa fell after touching an 2-1/2-year peak the
May arabica coffee futures on ICE soared 11.45 cents,
or 7.4 percent, to $1.6630 by 12:23 p.m. EST (1723 GMT) after
touching $1.6845, the highest since October 2012.
The benchmark coffee contract on ICE Futures U.S. was poised
for its steepest two-day rally since 2002, as traders fretted
over cuts to Brazilian output.
Arabica coffee prices have risen over 40 percent so far this
year in a big turnaround from a prolonged downtrend which lasted
more than two years, driven by huge global supplies,
predominantly from Brazil.
Dry conditions in Brazil have persisted to the point that
many believe its production will be sharply reduced, potentially
leading to a global supply deficit this season.
"You've got both technicals and fundamentals behind this
now," said Nick Gentile, senior partner of commodity trading
consultancy Atlantic Capital Advisors, pointing to a bullish
breakout from a flag formation.
Brazilian forecaster Somar said light rainfall would
continue after three days of heavier rains broke a long period
of drought, though precipitation will ease in some regions.
Liffe May robusta coffee rallied $98, or 5.2
percent, to $1,973 a tonne after touching a seven-month peak of
Total open interest in ICE arabica futures rose to a
three-month high on Tuesday as the market had its biggest
one-day surge since 2004, while raw sugar open interest dropped
as the market jumped, exchange data showed on Wednesday.
SUGAR RALLIES ON SHORT-COVERING
ICE March raw sugar futures rose 0.32 cent, nearly 2
percent, to 16.48 cents per lb.
The benchmark spot contract jumped to a seven-week high of
16.49 cents a lb, extending Tuesday's gains, due to concerns
about cane crops after six weeks of hot, dry conditions across
Brazil's main farm belt.
The contract has recovered 12 percent from January's
3-1/2-year low of 14.70 cents a lb set under pressure from
back-to-back surplus years and huge output in Brazil.
"Drought and its effect creep up on markets as any coffee
trader will tell us. Perhaps we sugar traders have been a little
too sceptical on what is happening in CS (centre-south) Brazil,"
said Nick Penney, senior trader with broker Sucden Financial.
Macquarie analysts said in a report that Brazil's cane crush
will fall 2 percent to 585 million tonnes and sees a "tiny"
deficit of one million tonnes next season after four surplus
years, provided prices remain low.
May white sugar on Liffe gained $8, or 1.8 percent,
to $463.90 per tonne and rose as high as $464, the strongest
level for the front-month since November 2013.
Cocoa held near 2-1/2-year highs as dealers monitored the
tailing off of weather conditions and port arrivals in top
grower Ivory Coast.
May cocoa on ICE fell $25, or 0.8 percent, to close
at $2,934 a tonne, after hitting a 2-1/2 year high of $2,985 the
May cocoa on Liffe settled down 17 pounds, or 0.9
percent, at 1,835 pounds a tonne, having on Feb. 12 peaked at
1,871 pounds, the highest for the second-month since September
(Editing by Marguerita Choy)