* Arabicas set market alight on chart-based buying
* Shortage of arabica beans spur rally
* Battles escalate in top cocoa grower Ivory Coast
Arabica coffee futures soared to a 34-year high Monday on investment fund buying as tight supplies and a paucity of producer sales ignited the market's most powerful rally since the end of January.
Cocoa futures moved higher as fighting escalated in top producer Ivory Coast while sugar rose in consolidation business.
Volumes in U.S. soft commodities were light, with sugar and cocoa running over 50 percent below their 30-day norms and even arabica coffee volume standing at a quarter below the norm, Thomson Reuters data showed.
ICE's May arabica coffee futures
jumped 8.35 cents or by 3 percent to close at $2.8115 per lb, the highest settlement in 34 years and the biggest percentage gain for the second position coffee market since Jan. 28.
The surge inspired London's robusta coffee market, with London's May robusta coffee up $13 to end at 2,403 per tonne, having hit a 3-year top at $2,429.
Hernando De La Roche, director of Hencorp Coffee Group, said the market vaulted higher on renewed interest from investment funds and was further bolstered by tight supplies of washed arabica beans.
"Right now there is some new buying interest from funds that's moving the market," he said.
The influx of funds could be seen in total open interest in arabica futures on ICE Futures U.S. as it reached 125,063 lots by March 4, up 0.4 percent from the previous day and marking the third straight increase after falling to a one year low early last week.
Technically, buying came into the market after breaching Friday's peak at $2.792, dealers said.
"As soon as the market broke those highs, there was new buying coming in so the technical picture looks like it's going up," De La Roche said.
"It's presumably a large fund or managed money that has decided now is the time (to buy coffee)," said Gary Mead, analyst with VM Group in London.
Larry Young, president of commodity firm Covenant Trading, cautioned the rally in arabica futures are a "little overdone" because the market had rallied over 20 percent since late January.
He said arabicas may see a retracement back to $2.50, but the strength of fundamentals will reassert itself and a run toward $3 or higher will unfold in the weeks ahead.
"$3 coffee's definitely what people are talking about now," said Young.
COCOA UP ON IVORIAN FIGHTING
A bitter power struggle in top cocoa producer Ivory Coast kept cocoa near 32-year highs. But cocoa supplies remain plentiful.
New York's May cocoa contract rose $5 to settle at $3,662 per tonne. Liffe's May cocoa contract added 6 pounds to finish at 2,346 pounds per tonne.
Ivory Coast rebels have seized a third town in the west of the African country, forces loyal to disputed incumbent Laurent Gbabgo said on Monday, adding reinforcements were on the way to
try and reclaim it.
An export ban, sanctions against the country and a crippled banking system have severely hindered activity in Ivory Coast's cocoa industry.
Sugar prices were also higher, with whites particularly strong as it caught up with gains in ICE raws late on Friday after the Liffe market had shut down for the week.
"London is having to catch up with New York, which rallied equivalent to $10 after London closed," said James Kirkup, head of sugar brokerage at ABN AMRO (Markets) UK Ltd.
New York's May raw sugar contract gained 0.11 cent to close at 29.99 cents per lb. London's May white sugar futures rose $13.10 to finish at $748.80 per tonne.
Dealers said the sugar market was tracking nominations of vessels by Cargill after it received almost 1 million tonnes of raw sugar against expiry of the ICE March contract at the end of February.
"If they (Cargill) nominate ships at a speedy rate, the market would interpret that as constructive," Kirkup said.
Broker Sucden said raw sugar prices were likely to drift sideways unless fresh fundamental news moved the market.
"We expect a period of consolidation to follow between 29 and 31 cents basis May New York and between $720 and $760 basis May London," said Sucden Financial's Nick Penney.
* ICE sugar and ICE coffee in cents per lb, ICE cocoa, Liffe sugar and Liffe coffee in dollars per tonne. Liffe cocoa in pounds per tonne
Source: https://portal.hpd.global.reuters.com/
