SOFTS-Arabica coffee moves upward, cocoa pares losses

* Stronger dollar pushes ICE cocoa down

* Sugar rebounds after touching a two-month low on Monday

* Arabica rises as dealers take profit on short positions (Updates prices)

By Marcy Nicholson and Michelle Martin

NEW YORK/LONDON, March 13 (Reuters) - U.S. arabica coffee futures rebounded modestly on Tuesday after falling to a 17-month low in the prior session, while cocoa markets pared their losses and sugar edged up.

May arabica coffee futures on ICE climbed 1.3 cents, or by 0.7 percent, to settle at $1.8615 a lb. The market consolidated in quiet trading after falling roughly 24 percent in the past two months.

"It's because it fell so much. It's just a case of some bargain hunting," Macquarie analyst Kona Haque said of the rise in arabica prices.

The premium of arabica over Liffe robusta inched higher to around 96 cents per lb, after falling to a 1-1/2-year low just above 93 cents on Monday.

Dealers said the strength reflected profit taking on short positions, with the relative strength index showing the market remained technically oversold following a prolonged slide that saw prices dip to a 17-month low for the second position of $1.8105 on Monday.

The May robusta contract on Liffe fell $14, or 0.7 percent, to end at $1,972 per tonne.

"I would have thought that the market has probably got itself back into a range where it's quite happy to stay at the moment... It's likely to just hold in this range for the time being," one London broker said.

Traders said discounts to London coffee futures prices narrowed in Vietnam after global prices slid overnight, putting exporters and domestic speculators on hold.

Cocoa was weak but well above its session lows as origin sellers entered the market.

"It's difficult to be bullish cocoa. The weather looks good in Ivory Coast," said one veteran cocoa dealer in New York.

"In Ghana, they're trying to make room for what will be unavoidably smuggling from Ivory. The premium in Ghana verses Ivory Coast is very high at the moment at the farmer level."

May cocoa futures on ICE closed down $11 at $2,372 a tonne as the market consolidated further after last week's run-up.

The opening times for ICE coffee and cocoa futures, and the settlement window for cocoa are delayed through March 23, due to the start of Daylight Savings Time in the United States. (For detailed information: r.reuters.com/wus96s)

"Funds are a little bit short as well, so technically it's looking like it's run out of a bit of steam to the upside so it's all pointing downwards for the time being," a London-based cocoa trader said.

"Daily cocoa hedging is coming through and it's just weighing down on the market," he added.

Strong U.S. and German data boosted global stock markets and the dollar, which hit a near 11-month high against the yen and a near one-month high against the euro, a factor that can pressure dollar-denominated commodities.

May cocoa on Liffe settled 11 pounds lower at 1,537 pounds a tonne.

Prices of cocoa butter hardly moved in Asia but could fall next week because most chocolate makers had already bought supplies ahead of the Easter high-demand period, leaving grinders with unsold stocks, dealers said.

SUGAR EDGES UP

Raw sugar futures were slightly firmer after an early downturn ran into trade and consumer buying, and modest investor buying, analysts said.

May raw sugar on ICE rose 0.36 cent, or 1.5 percent, to end at 24.13 cents a lb. The contract dipped to a one-month low at 23.26 cents on Monday.

The market again tested support around 23.50 cents, basis May, but bounced just as quickly in a subdued session, they said.

"The market is kind of stuck," said Country Hedging Inc analyst Sterling Smith.

Dealers said the market derived some support from talk that some estimates of production in the key centre-south region of Brazil may need to be revised downward.

London May white sugar futures rose $9.60, or 1.5 percent, to settle at $641.30 per tonne.

From: reuters.com