(Rewrites throughout, updates prices; adds comment, NEW YORK dateline)
NEW YORK/LONDON, March 6 (Reuters) - New York cocoa futures fell from a 16-month high on Tuesday, changing direction on profit-taking at technically overbought levels after rallying 6 percent the prior session, while the London market extended gains to a one-year high.
* May New York cocoa settled down $5, or 0.2 percent, at $2,441 per tonne, after climbing to $2,471, the highest for the second position since November 2016.
* Its rare premium over the London market fell to around $44, nearly half the $81 premium reached on Monday, the highest since 1977.
* The second-position contract fell to 82.5 on the Relative Strength Index, still a technically overbought level and down slightly from the prior session’s near-10-year high.
* “A lot of clients have taken profits. Some of it’s the technical trade now,” said Peter Mooses, senior market strategist for RJO Futures in Chicago, pointing to resistance at $2,475.
* Prices rallied on Monday and early Tuesday on heavy fund buying, traders said.
* May London cocoa settled up 19 pounds, or 1.1 percent, at 1,727 pounds per tonne, after reaching 1,732 pounds, its highest since March 2017.
* March London, which expires next week, flipped to a premium over May LCCH8-K8 on Monday and reached a contract high of 24 pounds on Tuesday, which dealers said signaled stronger appetite for delivery.
* Selling pressure was limited as West African producers were well hedged for next season and speculators remained cautious about selling amid worries over more modest Ivorian output, traders said.
* The world market could be poised for a small surplus of about 50,000 tonnes in the 2017/18 season, said Dieter Weisskopf, CEO Lindt & Spruengli. This is down sharply from the International Cocoa Organization’s forecast for a surplus of 105,000 tonnes.
* May raw sugar settled down 0.11 cent, or 0.8 percent, at 13.45 cents per lb, having run into resistance at the 40-day moving average.
* Dealers noted the prior session’s short-covering advance had been undermined by the threat of hedging by Brazilian producers.
* “We believe, as do others, that producers have been postponing their pricing cover more and more as prices have declined,” said Nick Penney, senior trader at Sucden Financial.
* May white sugar settled down 80 cents, or 0.2 percent, at $366.30 per tonne.
* May arabica coffee settled up 0.15 cent, or 0.1 percent, at $1.2125 per lb.
* May robusta coffee settled up $22, or 1.3 percent, at $1,777 per tonne. (Reporting by Marcy Nicholson in New York and Ana Ionova in London; Additional reporting by Silke Koltrowitz in Zurich; Editing by David Evans and Lisa Shumaker)