* India retains sugar output forecast for 2016/17
* Arabica coffee climbs to two-month high (New throughout with updated prices, comments; adds byline, NEW YORK dateline)
By Chris Prentice and Nigel Hunt
NEW YORK/LONDON, Jan 24 (Reuters) - Arabica coffee futures retreated from a two-month high on Tuesday on profit-taking, as raw sugar reversed earlier gains in technically-driven trade and cocoa on ICE Futures U.S. gained amid currency gyrations.
ICE March arabica coffee settled down 3.05 cent, or 2 percent, at $1.5235 per lb after touching $1.5695, the highest level since late November.
“We were getting technically overbought,” said Nick Gentile, managing partner of commodity trading advisor NickJen Capital.
The front-month’s 14-day Relative Strength Index retreated to 61.385 from 70 on Monday, Reuters data show.
The March robusta coffee contract on ICE settled down $36, or 1.6 percent, at $2,212 per tonne.
Gains in the robusta market have encouraged buying in arabica, though the former market has retreated from last week’s 4-1/2 year high.
ICE March robusta coffee settled down $36, or 1.6 percent, at $2,212 per tonne. The second position hit a peak of $2,268 on Friday, its highest since May 2012.
In sugar, the March raw ICE contract settled down 0.06 cent, or 0.3 percent, at 20.58 cents per lb, retreating after nearing technical resistance at the 21-cent level.
Dealers said the market had tested resistance at the upper band of the 20-21 cent range after finding support at 20.05 cents on both Thursday and Friday last week.
Eyes were focused on India, where a poor crop and rising domestic prices had raised the possibility that the world’s second-largest producer could need imports.
India has retained its sugar output forecast for the 2016/17 season at 22.5 million tonnes, a government official said, after a meeting of representatives from India’s leading sugar-producing states.
Dealers said there was scope for a downward revision in the near future, with an improved outlook in Uttar Pradesh more than offset by diminishing prospects in Maharashtra and Karnataka, where drought has ravaged crops.
Analyst Green Pool recently cut its estimate of India’s sugar production by 1 million tonnes to 20.5 million tonnes. Dealers said that any imports by India now appear more likely to be whites and later in the season.
ICE March white sugar settled down 10 cents at $540.90 per tonne.
ICE March New York cocoa settled up $36, or 1.7 percent, at $2,201 per tonne, bolstered by earlier strength of the British pound against the U.S. dollar which encourages buying of the dollar-traded contract.
ICE March London cocoa settled up 11 pounds, or 0.6 percent, at 1,757 pounds per tonne. (Editing by David Goodman and Marguerita Choy)