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Raw sugar hovers near 7-year low, arabica eases

LONDON - Raw sugar futures were buoyed by a weaker dollar on Wednesday, drifting off this week's seven-year low, while arabica coffee eased as traders locked in profits from a three-day rally.

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LONDON - Raw sugar futures were buoyed by a weaker dollar on Wednesday, drifting off this week's seven-year low, while arabica coffee eased as traders locked in profits from a three-day rally.

Cocoa dipped in light volumes, still near Tuesday's three-month low.

October raw sugar on ICE was up 0.02 cents per lb, or 0.2 percent, at 10.64 cents at 1148 GMT, after falling on Tuesday to 10.37 cents, matching Monday's seven-year low.

"Certainly on the fundamental side, there is growing weather risk that is starting to make its way into some production concerns," said Tracey Allen, analyst with Rabobank, referring to risks from the El Nino weather pattern on sugar production.

"We are certainly moving into a modestly tighter phase in the mid-term, but the world still has very, very comfortable sugar supplies available."

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Dealers said sugar and arabica coffee traders were keeping a close watch on fluctuations in the Brazilian real against the dollar. Recent weakness in the real has stoked Brazilian producer sales, dragging on prices.

October white sugar traded up $1.30, or 0.4 percent, at $353.90 a tonne.

September arabica coffee traded down 1.7 cents, or 1.2 percent, at $1.3550 per lb on technically driven selling, having earlier touched a two-month peak of $1.3805 per lb, underpinned by concerns over small bean sizes in Brazil.

"A correction lower could target initially the 10-day moving average at $1.311 per lb," said Myrto Sokou, a senior research analyst with Sucden Financial.

"Further declines could test support near the 40-day moving average at $1.2931 per lb."

BMI Research revised down its Brazilian coffee production forecast for 2015-16 to 46.3 million bags on concerns about its arabica crop compounded by a poor robusta harvest.

Brazil's official statistics institute IBGE raised its crop estimate to nearly 44.2 million bags.

Market estimates range from 45 million to 52 million bags.

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September robusta coffee traded down $17, or 1 percent, at $1,708 a tonne.

December cocoa in New York was down $8, or 0.3 percent, at $3,088 per tonne, having fallen on Tuesday to $3,040, its lowest since May 13.

In London, December cocoa eased by 8 pounds, or 0.4 percent, at 2,061 pounds, having eased on Tuesday to 2,035 pounds, the lowest since May 15.

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