SOFTS-Raw sugar hits two-month peak, arabicas ease
* Big raw sugar delivery seen in expiry
* Brazil's Petrobras raises gasoline and diesel prices (Adds trade comment, updates prices)
By David Brough
LONDON, Sept 30 (Reuters) - ICE raw sugar futures rallied more than 4 percent to a two-month high on Wednesday after Brazil's oil firm Petrobras said it would raise fuel prices, potentially boosting demand for cane-based ethanol.
Arabica coffee and cocoa futures eased, pressured by a stronger dollar.
Petrobras is raising gasoline prices by 6 percent and diesel by 4 percent at refineries in Brazil. This may encourage drivers using flex-fuel vehicles to use more cane-based ethanol biofuel, thereby reducing the amount of sugar made from cane.
"The miller (in Brazil) will produce more ethanol and less sugar," a senior Western analyst said.
Traders also referred to an increasingly bullish outlook for tighter supplies in the crop year that begins on Oct. 1.
The most-active ICE March 2016 raw sugar contract surged 0.51 cent, or 4.1 percent, at 12.97 cents per lb at 1314 GMT, after hitting a two-month high of 12.98 cents. Continuación...