SOFTS-Cocoa prices extend rally off nearly two-year lows

LONDON, Nov 28 (Reuters) - Cocoa prices traded on the ICE exchange surged on Friday as the market extended its rally off this week's two-year lows on the view that bearish news is priced in for now while technical signals point to oversold conditions.

COCOA

London cocoa LCCc2 ​​rose 1.8% to 3,981 pounds per metric ton at 1355 GMT. Prices had fallen to 3,650 pounds on Tuesday, their lowest level in nearly two years.

Cocoa traders are increasingly nervous given funds' growing short position in what is a technically oversold market, dealers said. Short positions are essentially bets on price drops.

The chocolate ingredient has been under pressure overall thanks to increased port arrivals in top grower Ivory Coast, expectations the European Union will again delay its anti-deforestation law, and the U.S. move to slash import tariffs.

"Nevertheless, we expect prices to remain historically elevated and volatile, due to ongoing structural challenges and climate-related risks," BMI, a unit of Fitch Solutions, said in a note.

New York cocoa CCc2 rose 4.6% to $5,328 a ton, playing catch-up with London after U.S. markets were closed on Thursday for the Thanksgiving holiday.

COFFEE

Robusta coffee LRCc1 edged up 0.23% to $4,551 a metric ton.

The contract gained 6.4% last week and has largely steadied this week.

Dealers noted that the harvest in Vietnam remains delayed after heavy rains, floods and landslides, while quality concerns prevail just as another storm looms.

Storm Koto is not expected to directly impact the coffee belt, though dealers said it does mean more rainfall on already saturated soils, further harvest delays and risks that crop quality might be compromised.

Arabica coffee KCc2 was little changed at $3.7980 per lb.

SUGAR

Raw sugar SBc1 ​dipped 0.2% to 15.11 cents per lb, heading for a weekly gain of 2.2%.

"Analysts have started to temper their forecasts for the global surplus in 2025/26," broker ADM ISI said.

It added that prices had, at their lows earlier this month, marked a 50% fall from the November 2023 12-year high. This slump has "set the market up for a corrective rally," the broker said.

White sugar LSUc1 fell 0.8% to $433.10 a ton.