January 14, 2015 / 1:13 PM / 5 years ago

SOFTS-Arabicas rally, Brazil weather a worry

* Index selling in arabicas wraps up

* European, N. American cocoa grind data due Thursday

By David Brough

LONDON, Jan 14 (Reuters) - Arabica coffee futures on ICE rallied over 3 percent on Wednesday on chart-based buying and worries over dry weather in top grower Brazil, with index selling capping gains.

Raw sugar firmed, underpinned by physical buying, and cocoa eased, pressured by expectations for a weaker European fourth-quarter cocoa grind on Thursday.

Front-month March arabica coffee surged over 3.5 percent to a session high of $1.8325 per lb, and later traded at $1.8205 per lb, up 2.9 percent, at 1236 GMT.

Dealers talked of concerns over below-normal rainfall in Brazil.

“It has been overly dry again since December (in Brazil),” Commerzbank said in a daily market report. “The prospect of another poor Brazilian coffee crop leads us to anticipate rising coffee prices over the next few months.”

Arabica futures prices were capped by the fifth and final day of the index fund rebalancing, which has brought heavy selling into the market, traders said.

March robusta coffee rose $16, or 0.8 percent, to $1,980 per tonne.

Sugar rose, supported by physical buying and weather concerns in the world’s leading exporter Brazil.

The front-month raw sugar contract rose 0.15 cent or 1 percent to 15.02 cents a lb.

“There have been reports of good destination buying recently which would help to absorb stocks left towards the end of the current campaign,” said Nick Penney, a senior trader at Sucden Financial Sugar.

March white sugar traded up $2.50, or 0.6 percent, at $394.30 per tonne.

In cocoa, dealers awaited what is expected to be weaker fourth-quarter 2014 European grind data on Thursday. In North America, expectations range from 4 percent lower on falling demand to 2 percent higher on the more robust U.S. economy.

London May cocoa was down 13 pounds, or 0.6 percent, at 2,004 pounds per tonne. New York March cocoa was down $29, or 1 percent, at $2,962 per tonne. (editing by John Stonestreet)

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