July 27, 2011 / 3:28 PM / 9 years ago

SOFTS-Sugar reverses losses, eyes Brazil crop, coffee falls

* Large sugar crops expected in a number of producers

* Ample supplies of West African cocoa

* Technical weakness in coffee futures market (Adds trade comment, updates prices)

By David Brough

LONDON, July 27 (Reuters) - Sugar reversed losses on Wednesday, hemmed in by concerns over Brazil’s crop and prospects for increased output in a number of producers, while coffee futures slipped, as fears of a U.S. debt default weighed on markets.

ICE cocoa futures were also lower as ample West African supplies dragged on prices.

ICE raw sugar reversed early losses, and hovered below October’s contract high of 31.68 cents a lb touched on Monday, underpinned by uncertainty over top producer Brazil’s crop size due to a mix of weather factors and aging cane.

Crushing of cane in Brazil and production of sugar and ethanol made from it are catching up with the 2010 season, data from cane industry association Unica showed on Tuesday, but the crop may soon run out of puff.

Jonathan Kingsman, head of the Lausanne-based Kingsman sugar and ethanol consultancy, said the data had not provided direction to the market, which traded in a range, pressured by a stronger dollar.

“Unica was not conclusive either way,” he said.

Kingsman noted that while output expectations in number one producer Brazil had been revised lower, big sugar crops were expected in a number of other producers, such as Russia, the Philippines and Pakistan.

Thomas Kujawa of brokerage Sucden Financial said: “We seem to have a collective (i.e. Bear and Bull) ‘what if’ scenario being played out before us as the Bears are scared of more bad news from Brazil and the Bulls worry over good news about the northern hemisphere crops.”

October raw sugar futures on ICE were up 0.36 cents or 1.2 percent at 31.30 cents a lb at 1428 GMT.

October white sugar on Liffe was up $5.40 or 0.7 percent to $811.00 per tonne, after touching a contract high of $821.00 on Monday.

New York October sugar is expected to rise to $32.60 cents per lb, as an upward wave (5) is progressing, according to Reuters analyst Wang Tao.

Arabica coffee futures on ICE extended losses, as market technicals indicated potential for further weakness.

New York coffee KCc2 has completed a weak wave (4) rebound, and would fall to $2.4220 per lb, Reuters analyst Wang Tao said.

September arabica coffee on ICE fell 5.0 cent or 2.04 percent to $2.3995 per lb. The contract dipped to $2.38 on Thursday, its lowest level since January.

September robusta coffee on Liffe traded down $57 or 2.6 percent to $2,116 per tonne.

Indonesia’s coffee beans were offered at record premiums of $400 a tonne above London futures, highlighting worsening supply scarcity in the world’s second-largest robusta producer after Vietnam, dealers said on Wednesday.

Cocoa prices were near unchanged in range-bound trading, underpinned by industry off-take, with upside limited by a growing 2010/11 world surplus.

“You’ve got overhead selling from Ghana and the manufacturers seem to be prepared to take a bit of cover at these levels,” said William Venables, head of cocoa at Armajaro Trading Limited.

Ivory Coast and Ghana 2011/12 cocoa production is expected to fall 15 percent on the year, helping switch the global market into a deficit of over 100,000 tonnes, international trade house Armajaro said on Wednesday.

September cocoa on ICE fell $12 or 0.4 percent to $3,003 a tonne.

London September cocoa was up 2 pounds or 0.11 percent to 1,875 pounds per tonne in slim volume of 3,375 lots. (Reporting by David Brough; editing by Jason Neely)

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