* Analysts see damage to Brazil coffee from drought
* Cocoa underpinned by expected 2013/14 global deficit
* Sugar prices pressured by ample supplies (New throughout, updates closing prices; adds analyst/meteorologist comment, second byline, NEW YORK dateline)
By Marcy Nicholson and David Brough
NEW YORK/LONDON, March 11 (Reuters) - Arabica futures extended their steep rally on Tuesday, touching a two-year high as parts of top grower Brazil’s coffee belt failed to receive enough rain, while robusta rose to a one-year high.
Cocoa on ICE Futures U.S. and Liffe rose to 2-1/2-year highs on chart-based buying, while sugar eased.
May arabica coffee futures on ICE closed up 2.25 cents, or 1.1 percent, at $2.0565 per lb, after peaking at a two-year high of $2.0890.
The cost of arabica beans has surged by about 85 percent since the start of the year, boosted by concerns that an unprecedented drought in Brazil, which took place as cherries were developing on the trees, would cut the size of the 2014/15 crop and could curtail production in 2015/16.
While some parts of Brazil’s coffee belt have been receiving much-needed rain, others have not and forecasts for below-normal precipitation remain.
“Despite some recent rains, dryness continues to stress crop growth from eastern Sao Paulo to central and eastern Minas Gerais and Rio de Janeiro,” said Maryland-based MDA Weather Services in a morning report.
It is certain that some irreversible damage has been done, said Birgit Wippler, coffee analyst with F.O. Licht.
“Several analysts have reduced their production estimates for 2014/15 in Brazil. It seems the drought will also have an impact on the next 2015/16 crop,” Wippler said, adding that arabica coffee was also pulling robusta higher.
Still, Brazil’s exports were expected to rise six percent this year due to ample stocks from last year’s harvest, coffee export association Cecafe said.
Prices for robusta, which is used for instant coffee and as a lower costing bean included in some roasted blends, rose to a one-year high. The bean has benefited from arabica’s rally and risen 30 percent in 2014 so far.
Brazil’s robusta region has not been affected by the drought.
May Liffe robusta coffee closed up $33, or 1.5 percent, at $2,180 per tonne, having touched a one-year peak of $2,195.
Cocoa futures rose to multi-year peaks, supported by an expected global deficit in the 2013/14 season and buy-stops above $3,000 per tonne, basis ICE May futures.
“Some fund buying is being offset by commercial selling. If we stay above $3,000 for a few days in a row, we may move into a new range of $3,000 to $3,200,” said futures specialist at Citigroup in Chicago.
ICE May cocoa futures settled up $22, or 0.7 percent, at $3,006 per tonne, having touched the highest since September 2011 at $3,027.
May cocoa futures on Liffe closed up 18 pounds, or 1 percent, at 1,878 pounds a tonne, having earlier touched the highest since of 1,888 pounds.
“Provided prices can build on this level and further gains break out above 1,870 pounds, targets towards 1,900 pounds will be in sight,” Sucden Financial research analyst Kash Kamal said.
“Momentum indicators are hinting at continued upside move.”
Sugar prices were weak, with brokers saying supplies remained ample despite some reduction in the expected size of the crop in Brazil, the top producer of the sweetener.
May raw sugar futures on ICE ended down 0.19 cent, or 1 percent, at 18.03 cents a lb. May white sugar futures on Liffe closed down $7.10, or 1.5 percent, at $471.00 per tonne. (Additional reporting by Chris Prentice in New York; Editing by David Evans, David Goodman and Diane Craft)