(Updates with closing prices, market comment throughout; adds NEW YORK dateline)
NEW YORK/LONDON, May 17 (Reuters) - New York cocoa futures dropped over 3 percent on Thursday as speculators withdrew long positions, while raw sugar futures retreated from their highest level in almost two weeks as producer selling offset fund short-covering.
* ICE July New York cocoa settled down $91, or 3.33 percent, at $2,639 per tonne as technical signals drove speculator selling.
* Prices were under pressure after failing to surpass resistance around a key 62 percent retracement level from Monday’s high to Tuesday’s low, said a U.S. trader.
* “The algorithmic traders have been in control. There’s a lot of day trading going on,” he said, noting relatively stable levels of open interest in the contract.
* ICE July London cocoa settled down 39 pounds, or 2.06 percent, at 1,856 pounds per tonne, toppling from earlier gains.
* ICE July raw sugar settled down 0.05 cent, or 0.43 percent, at 11.56 cents per lb after peaking at 11.75 cents, the highest for the front month since May 4.
* Prices fell as producers sold into short-covering gains seen as dry weather stoked concerns about the crop in top producer Brazil, said the U.S. trader. The weak close, with prices settling below their opening level, was technically weak, he added.
* “Today was just a short-covering exercise that hit producer selling,” said the trader. “For sugar, without a weather event, there’s no (bullish) story.”
* ICE August white sugar settled up $4.20, or 1.30 percent, at $326.70 per tonne.
* July robusta coffee settled up $13, or 0.75 percent, at $1,750 per tonne after touching a one-week high of $1,757.
* Dealers said prices were supported by waning selling from Vietnamese producers, who are said to be well sold forward and willing to hold on to coffee at current levels.
* Differentials in Vietnam have firmed this week as a result, one dealer said, moving to discounts of roughly $60-$80 a tonne. Differentials collapsed to $100-$120 earlier in the month.
* July arabica coffee settled up 0.6 cent, or 0.51 percent, at $1.179 per lb.
* Dealers said speculators were taking a breather after pushing prices to 3-1/2 week lows earlier in the week, though the market remained vulnerable.
* “The funds are very much still not shaken out of their short position and are happy to sell rallies,” another dealer said. “And people see a lot of coffee availability.” (Reporting by Nigel Hunt and Ana Ionova Editing by Mark Potter, David Goodman and Richard Chang)