* Cane scarcity leads some Indian mills to shut early
* Firm dollar weighs on arabica coffee prices
By Nigel Hunt
LONDON, March 2 (Reuters) - London cocoa futures eased on Wednesday, retreating slightly from a four-week high set earlier this week, although the market was underpinned by the prospect of poor mid-crops in both Ivory Coast and Ghana.
Arabica coffee futures also dipped, nearing contracts lows set in January while raw sugar edged higher.
Dealers said the sterling-denominated London cocoa market had been buoyed recently by a decline in the value of Britain’s currency to a seven-year low against the dollar.
“London has been able to find some footing above 2,150 pounds while New York is still struggling to get through $3,000 which is psychologically quite a key level,” one London-based dealer said.
May London cocoa was 15 pounds or 0.7 percent lower at 2,179 pounds a tonne by 1303 GMT. The contract had risen to a four-week high of 2,224 pounds a tonne on Monday.
Dealers said a severe Harmattan wind was expected to reduce the size of the April to September mid-crop in Ivory Coast to around 450,0000 tonnes, down from last year’s 514,000 tonnes.
They said supply concerns driven by the expected poor quality of the tail-end of the main-crop and the upcoming mid-crop had tightened the market’s structure with both May/July and July/September trading at backwardations, which can be a signal of potential nearby supply tightness.
May New York cocoa was off $5 or 0.2 percent at $2,928 a tonne.
Arabica coffee futures were lower, weighed down by a firm dollar with the U.S. currency around a one-month high against a basket of major currencies on Wednesday.
“We are close to contract lows. The dollar recovery is not helping but it has managed to hold around here before,” one London coffee dealer said.
May arabica coffee was 0.85 cent, or 0.7 percent lower, at $1.1390 per lb, falling back towards a contract low of $1.1335 set on Jan. 20.
Robusta coffee futures were also lower with May down $4 or 0.3 percent at $1,373 a tonne.
Sugar prices edged up with May raws up 0.05 cents or 0.35 percent at 14.44 cents per lb. The contract had risen to a six-week high of 14.50 cents on Tuesday.
Dealers said the market had been supported by drought-eroded yields in both India and Thailand.
Cane scarcity has forced Indian sugar mills to close operations ahead of normal schedule and more than 100 factories have stopped crushing, a trade body said on Wednesday.
May white sugar was up $2.00 or 0.5 percent at $409.90 per tonne. (Editing by Jane Merriman)