Raw sugar hits two-month high buoyed by tight supplies

(Adds quote, updates prices)

LONDON, Feb 24 (Reuters) –

Raw sugar futures on ICE rose to a two-month high on Monday as a fall in production in India helped to tighten global supplies, while arabica coffee prices extended their decline from a record peak set earlier this month.

* Raw sugar futures rose 0.3% to 21.38 cents per lb by 1445 GMT after setting a two-month high of 21.45 cents.

* Dealers said a diminishing crop outlook in India, the world’s second-biggest sugar producer, had contributed to the recent run-up in prices, reducing the potential for exports from the South Asian country.

* “Indian commentators have swung behind the possibility of a 26 million metric ton sugar output, which would be an extraordinary outcome and another one for the long list of crop forecasting mishaps in that country,” analyst Green Pool said in a note on Monday.

* India produced about 29 million last season.

* Dealers noted the expiry of the March contract on Friday would be a major focus this week.

* Tight global supplies have heightened interest in receiving sugar against the contract and there are early estimates that the volume could be between 1.5 million and 2.0 million tons.

* White sugar rose 0.2% to $561.40 a metric ton.

* Arabica coffee was down 0.45% at $3.8735 per lb, extending last week’s decline.

* Dealers said prices had fallen significantly from a record high of $4.2995 set this month, with funds scaling back long positions and roaster buying interest drying up.

* Robusta coffee was down 0.8% at $5,670 a ton.

* New York cocoa futures rose 0.2% to $9,155 a ton as the market stabilised after falling 11% on Friday.

* Dealers said fund selling had triggered a sharp decline in prices on Friday against the backdrop of a weak demand outlook.

* London cocoa fell 0.7% to 7,350 pounds a ton. (Reporting by Nigel Hunt; Editing by David Goodman and Shailesh Kuber)