* Brazil coffee crop worries after 6 weeks of hot, dry weather
* 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 dateline)
By Chris Prentice and David Brough
NEW YORK/LONDON, Feb 19 (Reuters) - 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 previous session.
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 $1,982.
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.
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 previous session.
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 2011. (Editing by Marguerita Choy)